Staggering costs exclude pain

Quantifying the cost of alcohol abuse to society is an inexact science.

Who can put a figure on the death of a loved one, the permanent incapacitation of a breadwinner, the rape of a child?

In an effort to highlight at least the very basic costs of alcohol abuse when compared with what the alcoholic beverage industry contributes to the state coffers, the Soul City Institute has released a new study.

The paper was commissioned by Soul City as part of its preparation for a multi-year campaign on violence prevention and reduction through a focus on alcohol safety.

The paper reports on research aimed at establishing an estimate of the direct costs incurred by provincial and national government budgets because of alcohol abuse.

The estimate is based on allocations that aim to deal with both the consequences of alcohol abuse and to reduce the extent of alcohol abuse and its negative consequences.

The paper does not attempt to calculate the full cost to society of alcohol abuse. It focuses instead only on the costs reflected in government budget allocations.

The exercise is different from the regulatory impact assessments that government increasingly requires in respect of new legislation or policies.

Findings from the report raise some interesting questions.

For many years the international alcohol industry has been one of the most effective lobbying machines and, possibly as a result of this, governments around the world have been hesitant to impose harsher regulations on an industry that has led us to believe that it makes a significant contribution to the economy both through taxes and job creation.

The study is deliberately conservative and most of the estimates provided in the paper relate to expenditure.

There are, however, some revenues that accrue to the government on account of alcohol use or abuse. First, there are the fees paid to provincial governments for liquor licences.

Second, there are the excise duties levied on alcohol. Third, there is the value-added tax (VAT) generated by the sale of alcohol. The paper includes estimates for all these revenue sources.

It does not include estimates of the income tax paid by those employed in the liquor industry.

The study used national budgets across various departments including health, social development, safety and security, justice, correctional services and transport.

It does not focus on education, which the author says has a negligible budget for alcohol education.

The findings show that, all allocations included, figures suggest that provincial governments allocate a total of close to R7-billion on account of alcohol abuse, whereas national government allocates more than
R10-billion.

Against these amounts, researchers offset the revenue gained from VAT on alcohol sales and liquor licences to arrive at a net expenditure of more than R1-billion.

However, for a broader assessment, a presentation prepared for the governments of the Western Cape and the City of Cape Town by various academic and research organisations places the national cost of alcohol abuse at a staggering R25-billion or 2% of GDP.

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