Box 5.2Tax Rate Reduction and the Resulting Disease Burden in Mauritius

Mauritius, an island nation in the Indian Ocean, has a population of about 1 million. Tourism is the third-ranked industry in terms of hard currency earnings. In June 1994, the government drastically lowered customs duties on imported alcoholic beverages to 80 percent from rates that had ranged from 200 percent for wine to 600 percent for whisky and other spirits (Abdool 1998). The government made the change under pressure from the hotel industry, which claimed that tourists were not purchasing enough alcohol because of its high prices (Lee 2001). Other reasons given for the change were to reduce unofficial imports from abroad and to make better, more refined alcoholic beverages available to the local population. Despite little evidence to support the view, there were claims in the public discussion that better-quality alcohol would result in fewer health problems.

The effects of the change were felt mainly by Mauritians rather than tourists, as follows:

  • Arrests for driving with blood alcohol over the legal limit made primarily in connection with traffic crashes increased by 23 percent between 1993 and 1997.
  • Admissions of alcoholism cases to the island's psychiatric hospital shot up in 1994. The 1995 rate was more than twice the 1993 rate, and the rate rose again slightly in 1996 and 1997. Medical specialists in Mauritius agree that patients with alcohol problems account for an increasing portion of admissions in general medical wards and now represent between 40 and 50 percent of bed occupancy (Abdool 1998).
  • Age-adjusted death rates per 100,000 population for chronic liver disease and cirrhosis rose from 32.8 for males and 4.0 for females in 1993 to 42.7 for males and 5.3 for females in 1996 (WHO 1999, 2000).

Even though available statistics are limited, the reduction in alcohol import taxes clearly had a substantial negative effect on the health of Mauritians. Thus, the government's 1997 call for control measures for alcohol—specifically, new permits for licensed premises, increased excise duties on alcohol, and limitations on bars' opening hours—was not surprising. Alcohol taxes were increased somewhat in the 1999/2000 budget (U.S. Department of State 1999). However, an analysis by World Bank staff that did not take health effects into account called for further reductions in maximum tariff rates, identifying Mauritius as having an antitrade bias on the basis of the structure of its alcohol and tobacco taxes (Hinkle and Herrou-Aragon 2001).

Source: Adapted from DCP2, chapter 47, p. 900.

From: Chapter 5, Cost-Effective Strategies for Noncommunicable Diseases, Risk Factors, and Behaviors

Cover of Priorities in Health
Priorities in Health.
Jamison DT, Breman JG, Measham AR, et al., editors.
Copyright © 2006, The International Bank for Reconstruction and Development/The World Bank Group.

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