As Canadians head into one of the heaviest drinking weeks of the year, health policy experts say governments are overlooking a sobering fact: alcohol drains more money from the system than it brings in.
“The most misunderstood thing [about alcohol], at least in North America, is the fact that alcohol is costing taxpayers and governments money, not bringing in revenue,” said Timothy Naimi, director of the Canadian Institute for Substance Use Research and a professor at the University of Victoria.
“Taxpayers are subsidizing the production of alcohol and people who drink heavily.”
Alcohol’s net cost to society is one reason the World Health Organization has urged countries to curb alcohol consumption.
In a report released earlier this year, the WHO called for a 50 per cent global increase in taxes on alcohol, tobacco and sugary drinks by 2035, with the aim of reducing chronic disease and generating $1 trillion in public revenue over the next decade.
In Canada, health policy experts are also urging reforms such as minimum unit pricing and higher taxes for alcohol, but note that politicians often lack the popular backing to move ahead with these changes.
Profit and loss
A March 2025 report from the Canadian Centre on Substance Use and Addiction showed Canadians are drinking too much — and paying for it.
Canadians who drink consume, on average, more than 13 standard drinks a week, far beyond the recommended low-risk threshold of one to two drinks a week.
A 2024 study found total federal and provincial government revenue from alcohol was $13.3 billion between 2007 and 2020. Governments generate revenue through alcohol taxes, markups, licensing fees and government-run liquor stores.
Over the same period, total social costs were nearly $20 billion.
“Alcohol results in considerable public costs for health care, criminal justice, and economic loss of production,” the study says.
“It’s not really providing revenue … because the secondhand costs are not really being fully recouped,” said Naimi.
Health care and lost productivity are the largest factors contributing to the social costs, according to the study.
“Productivity losses have wide-ranging impacts on the economy and the well-being of people in Canada, which are squarely within the realm of government responsibility,” a spokesperson for the Canadian Centre on Substance Use and Addiction told Canadian Affairs in an email.
The centre says alcohol-related productivity losses include lost value of work due to premature deaths, disability and absenteeism. These losses hurt overall GDP, shrink income tax revenues and strain public services like health care.
‘Little gain’
Tim Stockwell, a scientist at the Canadian Institute for Substance Use Research and a psychology professor at the University of Victoria, says governments either are not aware of alcohol’s true costs or do not see the political benefits of addressing them.
“[T]here is not much political gain in rendering our most popular recreational drug less available or more expensive,” he said.
Naimi says that it is like the government’s left hand does not know what its right hand is doing, since finance departments do not track health and social costs.
“Alcohol policies [are] run out of departments of treasury or finance, so they only see the revenues,” said Naimi. “But they’re not the ones that are spending on all these other things that are caused by alcohol on the other side of the government.”
Jayadeep Patra, a scientist with the Centre for Addiction and Mental Health, says Canada needs to better predict the long-term costs of alcohol. Canada needs “smarter forecasting tools that combine data from health care, justice, and the workplace,” he said.
“Right now, most budgeting is short-term, but we need models that look 10, 20, or 30 years ahead — especially since alcohol-related harm often builds up slowly over time.”
Sin tax
Naimi says minimum unit pricing, which sets a floor price per drink, is a highly effective policy because it targets the cheapest alcohol, which is disproportionately consumed by the heaviest drinkers. Already in place in some provinces, minimum unit pricing reduces harmful consumption without significantly hurting revenue.
Alcohol consumption only drops slightly as prices rise, Naimi says. “If I raise the price 10 per cent, I’m only going to reduce consumption by seven per cent,” he said.
“If you do the math, when you raise taxes, you raise revenue.”
Experts say taxes — which raise prices across all products — can also be an important tool.
“The primary objective of alcohol taxation policy is to reduce the affordability of alcoholic beverages in order to lower consumption — both overall and among heavy drinkers,” Guillermo Sandoval, an economist with the WHO, told Canadian Affairs in an email.
“Alcohol demand is relatively inelastic — meaning that consumption falls, but by a smaller proportion than the price increase.”
The Canadian Centre on Substance Use and Addiction recommends taxing all alcoholic beverages based on ethanol content and indexing rates to inflation.
Industry groups like Beer Canada and Spirits Canada and the Canadian Taxpayers Federation call automatic alcohol tax hikes “undemocratic” and unpopular with the public.
But Naimi argues most people prefer so-called “sin taxes” over other forms of taxes.
“In public opinion polls, when you match up alcohol taxes or cigarette taxes in comparison to paying more property or income taxes, taxpayers overwhelmingly would prefer to pay higher sin taxes compared to higher property or income taxes,” he said.
Stockwell says stronger public messaging on alcohol’s health harms could shift public opinion. “People have assumed the health risk only applies at high levels,” he said.
“When people realize [alcohol causes cancer] their support for governments taking stronger action to increase price and reduce availability increases.”
