Would raising alcohol taxes reduce abuse?
Alcohol abuse is a multifaceted problem that requires a diverse portfolio of programs and policies. Adolescent drinking, alcoholism, drunken driving, alcohol-enabled domestic violence and child neglect, crime and public drunkenness all elicit distinct, tailored policy responses.
But one policy instrument would help reduce all these problems: alcohol prices. With higher prices come reduced rates of alcohol abuse and improvements in public health and safety.
Government influences alcohol prices in a variety of ways, but most comprehensively through alcohol excise taxes. Unfortunately, Congress has not adjusted alcohol excise rates since 1991, and since then inflation has significantly eroded the impact of those taxes. States also tax alcohol, and those rates also have declined in inflation-adjusted terms, despite some nominal increases. The overall result is cheaper alcohol, more alcohol abuse and more alcohol-related problems of all sorts than would otherwise have occurred.
Concerns that such taxes are regressive, or that they penalize the majority who drink moderately and safely, are off base. In fact, most Americans abstain or drink so little that alcoholic-beverage expenditures are a trivial part of their household budget — yet they would benefit from the extra government revenue (which could take the place of other taxes). Drinking, and hence excise tax payments, are concentrated among the 7 or 8 percent of the population who drink heavily and account for most of the alcohol-related damage. For that group especially, higher taxes would have a moderating effect on consumption.
The scientific evidence showing that prices directly affect abuse levels is strong enough to support a near-consensus among economists who study health behavior. Careful analysis of the effects of raising alcohol taxes bears out the link between higher taxes and reduced alcohol abuse. Most of these changes in price have been small, however, so the effects have been correspondingly small. Relatively large increases, such as Alaska's move to more than double alcohol taxes in 2002, have produced more substantial gains in health and safety.
Of course, prices are by no means the only — or the most important — influence on drinking patterns. The focus on excise tax rates is justified simply because taxes — unlike culture, demographics and other factors — are under the direct control of the government and thus can, at least in principle, be fine-tuned to fit the need.