Alcohol Tax Increase
With a proposed alcohol tax increase the cost of drinking could go up as we as a nation try to battle alcohol related illness and diseases.
The United States Congressional Budget Office proposed to raise the excise tax on alcohol in the United States in order to raise funds for National Health Care Reform. The proposal arose out of the non-partisan 2008 Congressional Budget Office Report, Budget Options, Volume 1: Health Care. The report contains options for raising revenue for Health Care. Option No. 108 identified general excise taxes on alcohol as a revenue-raising topic. The procedure would be to standardize general excise taxes on alcohol so that the base on which the federal excise tax is levied is the proof gallon. Currently different rates apply to beer, wine and spirits. By adjusting the tax rate, revenues will increase by $28 billion over the 2009-2013 period and by $60 billion over the 2009-2018 period. Congressional Budget Office Report (2008).
The intent of the proposal is multi-fold, addressing national health care, alcohol-related health concerns and alcohol consumption. The primary purpose of the proposal was to raise income for the federal government for national health care reform. The means for raising revenue is to raise taxes on alcohol. The proposal recognizes that alcohol consumption carries a huge “external cost” which includes spending on health care related to alcohol consumption and covered by the public, losses in productivity because of alcohol consumption that are borne by others besides the consumer and the loss of lives and property in alcohol-related accidents and crimes. In 1998 the National Institute on Alcohol Abuse and Alcoholism estimated that the external cost of alcohol abuse exceeded $100 billion. The proposal recognizes that the amount of tax levied on alcohol is small compared to the cost that alcohol drinking imposes on society. Wagenaaur, Salois, Komro (2009).
Statistical evidence abounds proving that raising excise tax on alcohol directly affects the amount of alcohol consumed. Research consistently shows that a higher price on alcohol decreases consumption across the board, whether the drinkers are underage or older.
The Congressional Budget Office further recognizes that the general population is not aware of the physical and emotional damage that alcohol does to the individual. By raising tax and lowering consumption the public would be protected from themselves because they are drinking less.
The alcohol tax rate has not been raised in the United States since 1991 and has not been indexed to meet the inflation rate since 1951. Alcohol tax has been raised only once in the last 50 years. The last rise occurred in 1991 under the Revenue Reconciliation Act of 1990. If the tax were adjusted to current inflation levels the beer tax would be three times the current amount and the liquor tax would be more than five times its current rate. As a result, the tax revenues that were 12 % of sales in 1980 are now 7%. Alcohol manufacturers reap the benefit as they can increase prices themselves to keep ahead of inflation but do not have an equivalent rise in the tax associated with their product. Center for Science in the Public Interest (4-07).
The Cost to Society far Outweighs the Tax Benefit
The federal government received about $8.9 billion from alcohol excise taxes in 2005. This is a small amount compared to the social and economic costs to society that result from excessive alcohol consumption. Recent alcohol studies place the cost of drinking alcohol to society at $184 billion for criminal justice, social services, property damage and loss of productivity expenses. According to the Centers for Disease Control and Prevention, alcohol causes as many as 85,000 deaths annually in the United States and contributes to health problems, including cancer, liver disease, alcoholism, brain disorders, motor vehicle crashes, violent crimes, spouse and child abuse and suicides. The small amount of money raised by tax on alcohol does not come close to covering the costs associated with alcohol abuse. Center for Science in the Public Interest (4-07).
The Ones Who Drink the Most Will Pay More
Thirty five percent of all adults do not drink alcohol. They will not pay a penny for the tax increase. The top 20% of drinkers consume 85% of all alcohol; therefore the remaining 80%will carry only 15% of the cost of the tax. Heavy drinkers will carry the majority of the tax increase and rightly so as they are the ones who impose the largest cost on society due to illness, alcoholism and hospitalization. Center for Science in the Public Interest (4-09).
Public Opinion Supports an Alcohol Tax Increase
In a 2001 national poll conducted by CSPI and Mothers Against Drunk Driving, 71 percent of Americans supported an increase in the tax on beer if the money were to be used for substance abuse prevention. In the same poll, 75 percent of Americans believe that a tax reduction would benefit only the alcohol industry more than consumers and 77 percent of drinkers agreed. Center for Science in the Public Interest (4-07).
Public Health and Safety is Affected and Underage Drinking is Reduced
Higher tax rates on alcohol and higher alcohol prices lead to reductions in alcohol consumption among youth, thus reducing traffic fatalities, some crimes and less adult alcoholism. Studies have shown that beverage alcohol prices and taxes are related inversely to drinking. In a “mega-study” released in 2008, “Effects of beverages and alcohol price and tax levels on drinking: a meta-analysis of 1003 estimates from 112 studies”, the authors examines 112 previous studies dating back to 1970, to determine the effect of alcohol price and tax increases on alcohol consumption. Their conclusion is that there is a verifiable, significant decrease in alcohol consumption commensurate with price or tax increases. They further report that, given the low cost of a tax increase, the substantial benefit derived from such a price increase and the social cost of alcohol, a price or tax increase is worth investigating. Center for Science in the Public Interest; (4-07).
The National Academy of Sciences recently recommended increasing alcohol taxes, especially on beer, in order to decrease teenage drinking. The U.S. Surgeon General, in March 2007, in a “Call to Action on Underage Drinking” called for a tax increase on alcohol or any other measure that would work, in order to reduce teenage drinking. A 2005 petition to Congress from 60 of America’s leading economists, including 4 Nobel Prize winners, agreed that an alcohol tax increase is due and justified. Congressional Budget Office Report (2008)
To read part two of this article click here. For more information on alcohol recovery please contact Hawaii Island Recovery at 1-866-515-5032 or contact us online.
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