Economics of Alcohol and Alcohol Taxation in Montenegro
ISEA is implementing the project "Economics of Alcohol and Alcohol Taxation in Montenegro" from February 2023 to March 2024, supported through the RESET Alcohol Policy Grants.
RESET Alcohol is a global initiative committed to reducing the health, economic, and societal harms of alcohol consumption. The initiative aims to create partnerships between governments, civil society organizations, technical institutions, and a consortium of global organizations dedicated to public health and alcohol policy. RESET Alcohol is led by Vital Strategies, in collaboration with Movendi International, the Tobacconomics team based at the University of Illinois Chicago, the Global Alcohol Policy Alliance, the NCD Alliance, and the World Health Organization.
The main goal of the project is strengthening research and evidence-based policy dialogue on advancement of alcohol tax system, which will result in clear and reachable policy responses to reduce consumption, prevalence, and economic cost of harmful alcohol use. One of the main objectives is to provide clear recommendations to policymakers for improving the alcohol tax policy system based on a study that systematically examines the country’s alcohol tax policy landscape. Another objective is to provide evidence on the sensitivity of alcohol demand to price and income changes (own-price and income elasticity) as an important input for framing relevant tax and health policies in cooperation with policymakers.
A round table on the topic of
Alcohol Use in Montenegro
The event brought together representatives from relevant institutions and the civil sector who work within their organizations on the issue of alcohol use. It was an opportunity to present ISEA research and to analyse the problem of alcohol use in Montenegro from various perspectives, as well as to draw common conclusions and recommendations for decision-makers, which could be useful for improving efforts to reduce alcohol use. This meeting also facilitated the exchange of relevant information among stakeholders and improved their cooperation.
During the introductory part, the panellists included Dr Ivana Živković from the Ministry of Health, Dr Ljiljana Golubović from the Institute of Public Health, Ružica Bajčeta from the Ministry of Finance, Sanja Šišović from the NGO CAZAS, as well as Associate Professor Ana Mugoša from the Faculty of Economics and Associate Professor Mirjana Čizmović from the Faculty of Economics and Business, both from the Institute for Socio-Economic Analyses.
Ms Živković emphasized the importance of preventive activities and collective action of all stakeholders in the fight against alcohol use. "Alcohol is a problem of the whole society and should be seen not only as a health issue but also as a social phenomenon. Therefore, everyone in society should contribute and change established patterns of behaviour when it comes to alcohol," she pointed out.
The Institute of Public Health has conducted several studies on alcohol use in Montenegro in the previous period. Ms Golubović stated that, in addition to a high prevalence of over 50% among the total population and 10.3 litres of pure alcohol consumed per person per year, increased alcohol consumption by girls and harmful drinking patterns are particularly concerning. Thus, nearly a third of 16-year-olds consume 5 or more drinks on one occasion.
Ms Bajčeta presented the activities of the Ministry of Finance in this area, with a special focus on excise policy that is in line with European directives. "Excise policy has not only economic effects but also health and social ones, and therefore, the Ministry of Finance strives to take into account various factors in its actions in this area," she stated. Regional alignment is important so that excise rates are similar and to prevent the emergence of a grey market.
The civil sector plays an important role in educational activities, especially through work with young people. Ms Šišović drew attention, first and foremost, to the social acceptance of alcohol in Montenegro, which leads young people to accept alcohol consumption as a normal phenomenon, following the example of their parents and other close environments. She recalled the message of the World Health Organization that "there is no safe level of alcohol" and emphasized that more work needs to be done on developing educational programs and strengthening the monitoring of enforcement of penal policy.
Research conducted by ISEA shows that a 10% increase in the price of strong alcoholic beverages would lead to an 8.84% reduction in demand for these types of beverages. Assuming an increase in excise duty from 12.5 to 15 euros per liter would result in a 7% price increase, a 5% decrease in consumption, and a 9.4% increase in excise and VAT revenue on this basis. "In this regard, one of our recommendations is to increase the tax burden on strong alcoholic beverages to achieve an increase in revenue but also to influence a reduction in the consumption of these products," Ms Čizmović highlighted.
The participants of the meeting concluded that addressing the challenges related to the high prevalence of alcohol use in Montenegro must be approached multi-sectoral. Recommendations were made to regularly conduct research in this area to create relevant policies, to develop new and improve existing educational and preventive programs, as well as media campaigns, primarily aimed at young people and their parents, and to improve relevant legislation and intensify monitoring of its implementation.
The round table was implemented as part of the project "Alcohol Use and Taxation in Montenegro'', which is conducting by ISEA under the RESET grant, supported by Vital Strategies. Key activities, carried out from March 2023 to March 2024, involve research related to taxation policy in the field of alcohol. The main goal of the project is to encourage research and political dialogue on tax reforms related to alcohol consumption and to formulate clear and achievable policies aimed at reducing alcohol use in Montenegro.
RESET Alcohol is a global initiative committed to reducing the health, economic, and societal harms of alcohol consumption. The initiative aims to create partnerships between governments, civil society organizations, technical institutions, and a consortium of global organizations dedicated to public health and alcohol policy. RESET Alcohol is led by Vital Strategies, in collaboration with Movendi International, the Tobacconomics team based at the University of Johns Hopkins, the Global Alcohol Policy Alliance, the NCD Alliance, and the World Health Organization.