In an effort to reduce both its sky-high alcoholism rate and its budget gap, Russia recently announced plans to quadruple the tax on the country’s eternal vice, vodka, over the next three years.
But while the move might be well intentioned, the long history of liquor taxation in Russia exposes a critical obstacle in the path of any anti-drinking campaign: the Kremlin’s own addiction to liquor revenues, which has derailed every previous effort to wean Russians from their tipple.
Russians consume about 18 liters of pure alcohol per person a year, more than twice the internationally recommended limit, a rate that President Dmitri A. Medvedev has called a “natural disaster.” Thanks in part to lifelong heavy drinking, the life expectancy for the average Russian man is now about 60 years, just below that of Haiti. Alcohol poisoning alone kills 40,000 Russians a year (compared with about 300 in the United States), and alcohol plays a role in more than half of all premature deaths.
Rampant alcoholism is nothing new, and Russian governments since the Middle Ages have introduced liquor taxes to reduce drinking rates.
But in almost every case, the public-health goal has been undermined by the state’s efforts to increase tax revenue. In Russia, the demand for vodka persists even when prices go up, so the state has an ever-present temptation to raise taxes and fill the treasury under the political cloak of making vodka more dear. Yet government after government has taken the following step of then promoting drinking to produce more revenue.
In 1591, for example, the English ambassador Giles Fletcher lamented that Ivan the Terrible encouraged his subjects to drink their last kopecks away in state-owned taverns where “none may call them forth whatsoever cause there be, because he hindereth the emperor’s revenue.”
Later, the ideological godfather of the Russian Revolution, Nikolai Chernyshevsky, denounced the state’s abdication of its responsibilities of “promoting national honor, the moral welfare of the nation, justice and fairness,” all of which he argued had been sacrificed to a system of hefty vodka taxes. “The only reason for its existence is monetary,” he complained. “Its sole purpose and concern is money, money, money.”
Though he was exiled to Siberia for this sort of criticism, Chernyshevsky’s argument was sustained by his revolutionary disciple, Lenin, who banned vodka during the early years of the Soviet Union.
But the siren song of liquor-tax revenue proved too tempting for Stalin, who lifted the ban to support the communist autocracy. “What is better, the yoke of foreign capitalism, or the sale of vodka?” he said. “Naturally, we will opt for vodka.”
Vodka revenues even played a role in the collapse of the Soviet state. In 1985, Mikhail S. Gorbachev restricted vodka sales to get Russian workers back to the assembly line; because vodka taxes provided a full quarter of the entire Soviet budget, the result was a substantial drop in government revenues. The Kremlin tried to patch the budget hole by printing more money, which worsened the hyperinflation that hastened the downfall of the communist state.
To his credit, Mr. Medvedev seems to grasp the pitfalls of trying to tax an entrenched culture of drinking out of existence, and he favors incremental, realistic policies like public-service messages and advertising restrictions rather than the bombastic and often hollow policy pronouncements of his predecessors.
Yet the proposed quadrupling of vodka taxes now threatens to undo this gradual progress, and return to not only the autocratic timbre of policymaking, but also the traditional harnessing of state finances to the vodka bottle. It will be hard to avoid the allure of maintaining, or even increasing, the estimated $11.2 billion in extra revenue that the proposed taxes will bring in.
Is the Kremlin poised to again stumble into this eternal liquor trap? It definitely seems so: in the fall of 2010 Russia’s finance minister, Aleksei L. Kudrin, told reporters that the best thing that his fellow citizens could do to help the country’s flaccid national economy was to smoke and drink more, thereby paying more in taxes.
“Those who drink,” Mr. Kudrin said, “are giving more to help solve social problems such as boosting demographics, developing other social services and upholding birth rates.”
Not only will the government be tempted to dial back its anti-drinking campaigns to preserve its liquor tax revenues, but the higher prices for legal alcohol — from about $3.50 for a half-liter bottle today to $14 — will, if experience holds true, drive Russians to drink dangerous and unregulated homebrews, as well as poisonous surrogates like eau de cologne, shoe polish and even jet fuel. Prime Minister Vladimir V. Putin recently based his opposition to the tax increase on precisely these past lessons.
Yet if Mr. Putin and Mr. Medvedev are to invoke the lessons of the past in dealing with Russia’s alcohol epidemic, they need to look more broadly at the dubious historical role of alcohol as a pillar of state finance. The only real solutions entail significant increases in public-health spending, rehabilitation programs, youth awareness campaigns and stricter advertising limits, as well as incremental rather than radical changes to pricing and availability.
Even then, the problem will take decades to solve. Most important, the Kremlin should take the first step to its own recovery and admit that it too has an alcohol problem, and not make the health of Russian finances dependent on the misery of its people.
By Mark Lawrence Schrad, an assistant professor of political science at Villanova University and the author of The Political Power of Bad Ideas: Networks, Institutions and the Global Prohibition Wave.