Canada’s alcohol deficit: The public cost of alcohol outweighs government revenue

Alcohol has long held a hallowed place in the consciousness of Canadian society. A more socially acceptable drug than some others, it’s associated with relaxation, socializing and celebration. As a result, alcohol has received an almost free pass when it comes to changes in policy and public opinion.

Unlike other substances, alcohol is often present in our lives, filling spaces — social gatherings with family and friends or at the dinner table — where other drugs would possibly seem out of place.

But we’ve also largely turned a blind eye to the cost of alcohol in Canada. Some might see alcohol taxes and sales as a source of revenue for governments, but they might not consider the full story: the public costs of drinking far outweigh the revenues.

The public costs of alcohol

Federal and provincial governments derive revenue from taxing alcohol and, in most provinces, selling it directly in publicly owned liquor stores. In the 2022-2023 fiscal year, governments earned $13.6 billion from the control and sale of alcohol.

But those earnings were considerably less than public spending on health care and criminal justice, and the economic loss of production, caused by drinking across the country.

My recent research published in the Journal of Studies on Alcohol and Drugs looked at the shortfall between spending and revenue between 2007 and 2020. This “alcohol deficit” is substantial and growing: it expanded by 122 per cent in real-dollar terms across the study period, beginning at $2.9 billion in 2007 and reaching an all-time high of $6.4 billion in 2020.

A growing alcohol deficit means governments are paying more to fix the problems caused by alcohol.
(Shutterstock)

Through excise and sales taxes, and public profits on sales and licensing fees, provincial and federal governments brought in $13.3 billion from the alcohol trade in 2020.

To study the other side of the coin, we tallied the cost of alcohol use in health care, criminal justice, economic loss of production and other direct costs like vehicle collision damage. The estimated public cost was nearly $20 billion. Put another way, every drink sold in Canada brought with it a deficit of about 38 cents.

Another divergence between how we perceive alcohol and other substances regards the drug supply. We may not think of the alcohol supply this way, but there are about 16.8 billion drinks sold every year in Canada. This amounts to more than 13 drinks per week for every drinker in the country. Compare this to Canada’s Guidance on Alcohol and Health released in 2023 by the Canadian Centre on Substance Use and Addiction (CCSA), which recommended that people consider drinking less and noted that any reduction in drinking helps lower alcohol risks.

This guidance also defined risk zones and found that consuming no more than six drinks per week would limit the risk of an alcohol-caused death to either low (one to two drinks a week) or moderate (three to six drinks a week) levels. Contrasting this advice with actual drinking rates indicates the alcohol supply in Canada isn’t consistent with promoting health and well-being.

Given the magnitude of the alcohol supply and the associated health impact, it’s practical to contemplate declines. This dovetails well with the main advice of the Guidance on Alcohol and Health: that people consider drinking a bit less. This would have health benefits for a lot of us — our families, friends, neighbours and colleagues — whether we’re heavier drinkers or more occasional imbibers.

Reducing the alcohol deficit

Research from the Canadian Alcohol Policy Evaluation project provides some suggestions and possible ways towards reducing this alcohol deficit.

Regulating health-based labels on alcohol containers is a priority. Labels are well-supported by public opinion and it is generally accepted that users have a right to know any product’s potential harms. Labels can remedy the facts that most drinkers still don’t know that alcohol is a carcinogen and that most people have difficulty estimating how much pure alcohol — how many “standard drinks” — a beverage contains.

Compared to other legal substance like tobacco and cannabis, labelling is an area where alcohol has clearly been provided that free pass. Think of a bottle of wine, wrapped in fetching packaging showing pictures of a rustic vineyard. Imagine if the same was done for tobacco: a cigarette pack showing sprouting tobacco plants and farm equipment, instead of plain packaging with ominous health warnings.

Regarding pricing, a policy called a minimum unit price (MUP) has been implemented in countries like Ireland, Scotland and Wales. This sets a minimum price that a unit of alcohol can be sold for. An MUP effectively removes ultra-cheap alcohols from the marketplace, products that draw young people and heavier drinkers into problems with alcohol.

Better labelling on alcohol can educate more people about the risks associated with drinking.
THE CANADIAN PRESS/Chris Young

Another potential benefit of an MUP is that it can level the commercial playing field. Ultra-cheap products tend to be produced by the largest multinationals, not by local distilleries, wineries or craft brewers. An MUP essentially levels the pricing playing field so local producers are better able to compete on quality, instead of economies of scale.

Most policy evaluations have also found that increases in the physical availability of alcohol, like a boost in the number of retail stores or added hours or days of alcohol sales, were associated with increased alcohol sales and alcohol-caused harms. Reducing how many stores there are in any given area and hours of sale is another potential mitigation policy.

Lastly, governments should consider advertising restrictions. When was the last time you saw cigarettes marketed on television, in print or on social media? It might be time to consider enhanced regulations on alcohol advertising as well.

In policy and public opinion, alcohol is treated differently than other potentially addictive substances. Alcohol policies like container labelling, minimum unit pricing and advertising regulations provide avenues towards reducing Canada’s costly alcohol deficit and, at the same time, improving public health.