The Amount of Excise Tax and its Effect on the Consumption of Alcohol and Cigarettes in European Countries

BACKGROUND: Tobacco smoking and alcohol consumption are widespread practices that are legal and socially accepted in many societies. One of the common tools to reduce the consumption of these legal drugs is increasing prices. The prices for customers include taxes (value added tax and excise tax). Hundreds of studies from around the world are interested in the impact of taxes and prices on the demand for tobacco products. This topic is also relevant for governments of all countries trying to regulate consumption.

AIM: The aim of the paper is to describe the amount of excise tax on legal drugs (alcohol, cigarettes) and compare their consumption in Europe and the countries of the European Union.

METHODS: The sources of data for this research were publicly available from the World Health Organization (WHO), Global Information System on Alcohol and Health (GISAH), Tax Foundation, and Eurostat. In the paper selected scientific methods are used (analysis, synthesis, induction, and deduction). For the literature review Scopus and Web of Science (WoS) were used.

SAMPLE: Data from Europe was used to examine alcohol and its taxation; a total of 31 countries were examined. All 27 countries of the European Union were examined for the assessment of cigarette consumption and its taxation.

RESULTS: The overview shows that low taxation can lead to high alcohol consumption (Estonia, France). On the other hand, even relatively high taxation may not lead to low alcohol consumption (Germany, Slovenia, Czechia, and Austria). However, a very high excise tax can lead to a reduction in alcohol consumption, for example in Norway, Iceland, Sweden, and also in Finland. In Finland and Denmark, it was confirmed that a high excise tax (Finland €6.14 and Denmark €5.27) leads to lower consumption of cigarettes (Finland 9.9% and Denmark 11.7%). In Bulgaria the data shows that a low excise tax (€1.81) leads to a large number of people who smoke cigarettes daily (28.7%). As many as 12.9% of people smoke more than 20 cigarettes a day, which is the highest value in the European Union. If we compare it with the average (6%), it is a very high value.

CONCLUSIONS: In many countries, e.g. Finland, Bulgaria, Sweden, Denmark, Norway, and France, it has been confirmed that the amount of consumption tax leads to greater or lesser consumption of legal drugs (alcohol, cigarettes).