TRACIT Report: Prohibition, Illicit Alcohol and Lessons Learned from Lockdown,

Lessons Learned from Lockdown

The TRACIT report, Prohibition, Illicit Alcohol and Lessons Learned from Lockdown, analyzes the economic and social impacts of strict restrictions on the production and/or consumption of alcohol (dry laws) during the early stages of the COVID19 outbreak, with a specific focus on the consequences associated with illicit trade.

The report suggests that crisis-driven COVID-19 related prohibitions on alcoholic beverages have generated a number of negative health-related externalities and promoted the development of parallel illicit markets. In dealing with the challenges associated with COVID19, government decisions must therefore be careful, balanced and prudent, to help guard against the negative socio-economic consequences that have historically attended the imposition of alcohol prohibition laws.

In the face of the ongoing health pandemic, the report recommends that governments:

Avoid prohibition laws as emergency response measures to protect people from the spread of virus. The benefits are conjectural, while the negative consequences are many and counterproductive to interdependent health, employment, and economic objectives.
Ensure availability and access to legitimate products that conform with social-distancing objectives without inducing demand for illicit substitutes.
Avoid the imposition of “emergency tax” increases on alcohol. A quick fix approach could end up being as reckless as the imposition of prohibition laws, resulting in lower consumption of legal beverages, smaller pools of tax collections and an increase in demand for untaxed, cheaper illicit alternatives.
Ramp up implementation of enforcement measures to ensure that illicit trade activities caused by the pandemic do not become permanent features of the post-pandemic economy.

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KEY LESSONS LEARNED

CRIMINALS
Prohibition incentivizes illicit markets and criminal activity.

CONSUMERS
Prohibition exposes consumers to health risks associated with toxic illicit alternatives.

GOVERNMENTS
Prohibition reduces tax collections and constrains budgets.

BUSINESSES
Prohibition sidelines legitimate businesses and depresses formal job opportunities.

Featured Webinar:

The OECD Task Force on Countering Illicit Trade (TF-CIT) webinar Crisis policy, illicit alcohol and lessons learned from lockdown, on 12 January 2021, discussed the existing evidence on the effects of recent alcohol demand restrictions, including identifying the associated impacts on illicit trade and related criminal activity.

This webinar is the fifth one organized by the TF-CIT that monitors illicit trade at the time of the pandemic.