Three questions for Sérgio Almeida



 WHO recommended, in its latest report, the implementation of numerous restrictive measures on the beverage industry, based on the data presented. Are these actions effective in combating harmful consumption?

WHO has been lobbying governments to implement a very broad agenda of regulatory measures on the alcoholic beverage industry. However, specifically in Brazil, data on consumption patterns are fragile and insufficient, and little is known about the impact (cost-benefit) of these restrictions. We therefore need more information before pursuing the stricter implementation of these commitments. Attitudes based on wrong premises do not always generate the desired results. The increase in taxes on alcoholic beverages or the imposition of restrictions in relation to the hours of sale of beverages, for example, have social costs that must be evaluated and compared with their advantages. The Government can use the negative externality argument (that harmful alcohol consumption creates a burden for third parties) as a justification for heavy taxation in the sector. But the evidence suggests that this is not working. Worse: it may even aggravate the problem, as the taxation of the sector may be increasing the consumption of the so-called illegal alcohol, which generates a series of losses for society.

 In order to combat illegal alcohol, it is necessary to know the numbers of this trade better. What would be possible sources of data?

There is always enormous difficulty in collecting information from any illegal market. There is no formal record of establishments, and interviewing participants involves, at some level, interaction with 'outlaws'. One way to find out what is happening with this underground economy is to look at both observable variables on industry inputs and correlated to the consumption of these illegal drinks. We can also investigate seizure data. In this case, however, the analysis must be done with great care, since a decrease in the quantity of seized products does not necessarily mean a reduction in the consumption of illegal products, and may simply be the result of a lesser apprehension effort by the inspection authorities . Knowing the size of this market and who is financing it, it is possible to make estimates on the costs of combat proposals. In the specific case of the alcoholic beverages market, we must point out that there are several types of illegal alcohol. Smuggled beverages, for example, generate loss of tax revenue, but are not necessarily harmful to health. The adulteration of alcoholic beverages with substances that are unfit for consumption, in addition to harming the regularly established and tax-paying industry, can bring burdens on public health and, ultimately, on the taxpayer's pocket.

What factors can lead a person to migrate from the legal drinks market to the consumption of illegal alcohol?

 All kinds of restrictions imposed on the supply side can stimulate the illegal market. The price increase, sometimes induced by tax increases, is one of these factors. Consider the analogous case of the pirated CDs and DVDs trade: the high price of original products, added to the ease in obtaining counterfeit products, generates an immense demand. In other words: an increase in the price of the legal product combined with an environment that does little to inspect and punish those involved in the illegal beverage trade can create favorable conditions for these activities to flourish. Time restrictions and even a total ban (a long-term dry law) tend to make people seek alternative sources of consumption, making them more susceptible to illegal drinks. An emblematic example of the effects of draconian restrictions, such as the ban, occurred during dry law in the United States. It reduced alcohol consumption for a while, but stimulated parallel production, where there was no certification or quality control. Result: apart from the losses for local governments that lost much of their revenue, the increase in the consumption of illegal alcohol caused an increase in the number of deaths - it is worth remembering that the intoxication by illegal drinks is much higher than those produced by the industry and that follow established by government authorities. Finally, we can say that in major events, if there is a ban on the consumption of alcoholic beverages, there is scope for unauthorized salespeople who can sell illegal alcohol. If you take any restrictive measures (taxation or whatever), people will respond (they always respond!), And those responses may have other social costs / benefits. Therefore, before implementing restrictions, it is recommended that you try to anticipate the responses, their effects, and incorporate all of them in a cost-benefit analysis as comprehensive as possible.