False profits — how alcohol costs Canada more than it brings in
Governments see alcohol as a cash cow, but health policy experts say it is quietly bleeding public coffers
By Alexandra Keeler | 4-minute read
As Canada weighs expanding alcohol access, the World Health Organization is urging countries to do the opposite.
In a report released July 2, the WHO called for a 50 per cent global increase in taxes on alcohol, tobacco and sugary drinks by 2035. The goal is to reduce chronic disease and generate $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.
They say alcohol is wrongly seen as a profit centre by governments, when its costs in fact outweigh the revenue it generates.
“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.”
Profit and loss
Earlier this spring, a report from the Canadian Centre on Substance Use and Addiction showed the country is 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, while total social costs were nearly $20 billion. Governments generate revenue from alcohol through taxes, markups, licensing fees and government-run liquor stores.
“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.
Some critics argue that lost productivity should not be considered. Economists have pointed out that productivity losses are difficult to reliably quantify.
“This assumes society is ‘owed’ some net contribution from each person,” a commenter posted in the popular online discussion forum Reddit. “That would be like saying video game producers owe everyone because people choose to play games instead of contribut[ing] more to society.”
Others take a different view.
“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.
They say 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.
“Framing productivity as outside the scope of public policy overlooks both the economic evidence and the moral imperative to create environments that support healthy, sustainable livelihoods,” the spokesperson said.
Red right hand
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 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 — are also a key tool to reduce alcohol-related harm.
“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 property or income 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.
Patra suggests using some of the revenue to fund addiction treatment or hospitals.
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.”
This article was produced through the Breaking Needles Fellowship Program, which provided a grant to Canadian Affairs, a digital media outlet, to fund journalism exploring addiction and crime in Canada. Articles produced through the Fellowship are co-published by Break The Needle and Canadian Affairs.
Alcohol is not as a recreational substance, it is a food group. If alcohol were more accurately recorded as the underlying cause of death—instead of the secondary conditions it leads to, such as liver failure, heart disease, or kidney complications—the statistics would be even more staggering.
This is not just a personal health issue; it’s a societal one. When the world becomes unbearable, people seek escape. The widespread presence of addiction and alcoholism in every city across North America is a visible symptom of a society that has failed to prioritize quality of life. People are suffering—loudly—and yet we continue to look the other way.