Why Canadian alcohol prices are so high (and why this is wrong).

Alcohol prices in Canada are approximately twice as expensive as in the United States. The sole reason for this price difference is that the Federal and Provincial governments regulate minimum prices and taxes on alcohol. This is often referred to as “social responsibility”.

The artificially inflated prices are commonly justified by the argument that since we have public health care in Canada, and since alcohol abuse is bad for a person’s heath, people who drink cost the system more money. Therefore, those people should have to pay for it with higher prices (taxes on alcohol). Makes sense, right? Not exactly.

How excessive alcohol use actually saves healthcare costs.

Those who drink a lot do damage their health (often requiring medical care) and shorten their lifespan. The problem with the argument that this “costs the healthcare system more money” is that they ignore the “shorten the lifespan” part of the equation. Most of the healthcare costs are incurred by people of advanced age. It’s not the 65 year old drinker who dies that costs the system a lot of money. It’s the person who doesn’t drink and lives to be 95.

The dead 65 year old drinker doesn’t spend 30 years drawing CPP, OAS, and GIS payments. The dead drinker doesn’t spend 20 years in a nursing home paid for by the government at $50,000 a year. Having a drinking problem doesn’t cost the system more money – it arguably saves it money.

While we appreciate an argument that discouraging alcohol abuse is generally positive for society, saying that drinkers cost the system more money and therefore ought to be taxed more for that reason is invalid and deceptive. This same argument is also used to justify higher taxes/prices in Canada for cigarettes and is now frequently cited by individuals wanting higher taxes on so-called “junk” foods.

These unenlightened people ought to sit down and think through what they are actually arguing. As with many things in life, it's just not that simple.

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