SPIKE IN ALCOHOL CONSUMPTION
More Sri Lankans have turned to hard liquor, which is more detrimental to health, due to higher taxes being imposed on beer brewing, according to recent reports. While taxes have resulted in a 39 percent reduction in the consumption of beer, the consumption of spirits is said to have increased by nine percent.
A country’s alcohol consumption can rise if the population is extremely happy when milder versions of alcohol are consumed, or they have been made extremely poor when the demand for illicit liquor or moonshine increases.
Therefore, excessively taxing the alcohol trade could lead to negative effects on the economy and society. However, analysts predict that the demand for liquor will not remain inelastic forever.