Raul Caetano Quotations

There are alcoholic beverages at different levels of price, and when you implement taxation, what happens is that the individuals who are able to purchase the alcoholic beverages that were more expensive just switch to less expensive ones.

In general, the evidence suggests that as you increase taxes, and alcoholic beverages become more expensive, individuals tend to use alcohol less. However, the findings in this paper indicate that the reality is not so simple, because there are alcoholic beverages at different levels of price, and when you implement taxation, what happens is that the individuals who are able to purchase the alcoholic beverages that were more expensive just switch to less expensive ones.

The full impact of any policy must take into consideration the potential freedom of consumers to change their beverage of choice from wine to beer or liquor, or to consume beverages that are cheaper. This is particularly important in western societies where affluent consumers have a lot of freedom to choose. Our results show that it would be much better to increase prices of low-level alcoholic beverages than to increase prices equally across all beverages.