Toronto, ON (May 7, 2025) - A new economic analysis shows that Lithuania’s unprecedented 2017 increase in alcohol excise taxation generated a massive return on investment (RoI) and improved public health outcomes, challenging critics who predicted economic harm and offering important insights for Canada’s ongoing alcohol policy discussions.
Published today in the top journal Addiction, the study was a collaborative international effort co-led by Dr. Jürgen Rehm, Senior Scientist at CAMH’s Institute for Mental Health Policy Research and Dr. Mindaugas Štelemėkas, Head of the Health Research Institute at the Lithuanian University of Health Sciences
Titled A Return on Investment Analysis for the 2017 Increase in Alcohol Excise Taxation in Lithuania, the study found that for every €1 invested in implementing the tax increases, Lithuania gained an average of €420 (expressed in 2023 Euros; ~$673 CAD) in economic returns. The findings highlight the powerful role alcohol taxation can play in saving lives, reducing health inequities, and strengthening national economies.
"Increasing alcohol excise taxes has long been recognized as one of the most effective tools to improve population health," said Dr. Štelemėkas. "Our study shows it can also deliver impressive economic benefits—directly countering arguments often made by the alcohol industry."
In 2017, Lithuania enacted sharp excise tax increases: 112 per cent for beer, 111 per cent for wine, and 23 per cent for spirits. Excise taxes are special taxes applied to specific goods like alcohol, and these increases led to average price hikes of 26 per cent, seven per cent, and six per cent respectively. Despite controversy leading up to the policy change, the results were overwhelmingly positive.
Key findings, adjusted for 2023 inflation rates, from the first year after implementation include:
- Increased tax revenue of more than €100 million (~$158 million CAD), a 20-per cent rise
- Reduced productivity losses due to lower rates of alcohol-attributable premature mortality, saving approximately €35.3 million (~$55.7 million CAD)
- Decreased healthcare costs by around €3.8 million (~$6 million CAD)
- No increases in illegal alcohol consumption
- Substantial reductions in overall mortality and alcohol-related hospitalizations
- A narrowing of health disparities between higher- and lower-income populations
Overall, the policy’s implementation cost the Lithuanian government approximately €320,000 (~$505,245 CAD), making the return on investment extraordinarily high.
“Evidence supported alcohol control policy measures have been a strong contributor to reduce alcohol related premature morbidity and mortality in Lithuania. The results of the study will serve us well for our health policy development,” noted Marija Jakubauskienė, the Minister of Health for the Republic of Lithuania.
The findings carry important implications for Canada, where alcohol remains one of the leading risk factors for death and disease. Despite growing evidence of harm, alcohol remains relatively affordable in many provinces and territories, and alcohol-related deaths have been rising in recent years.
“This is one of the clearest examples globally where an alcohol policy intervention not only improved health, but also made strong economic sense,” said Dr. Rehm. "Governments seeking to improve societal health while strengthening their economies should seriously consider following Lithuania’s lead.”
This evaluation was financially supported by the National Institute on Alcohol Abuse and Alcoholism project ‘Evaluation of the impact of alcohol control policies on morbidity and mortality in Lithuania and other Baltic states’.
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