(Reuters Health) – The sum total of taxes on alcohol doesn’t come close to paying the bills associated with excessive alcohol consumption in the U.S., researchers say.
The total damages from excess consumption add up to $2.05 per drink, while state and federal taxes bring in about $0.21 per drink, according to an analysis published in the Journal of Studies on Alcohol and Drugs.
Raising taxes on alcohol would not only help cover the costs associated with people drinking to excess, but that strategy might also lead to less problem drinking, said study coauthor Dr. Timothy Naimi, a physician and researcher at Boston Medical Center and Boston University.
“I think a lot of people are unaware of the size of alcohol taxes,” Naimi said. “People think of alcohol as a source of state revenue, but instead of supplying revenue, alcohol is costing states money,” he added.
“The bottom line on current alcohol taxes in the United States is that they don’t come close to covering the costs,” Naimi said.
Those costs are associated with harms such as car crashes related to drunken driving, alcohol-related homicides, and illnesses linked to excess drinking like liver damage and heart disease.
Naimi and his colleagues analyzed the various types of state and federal taxes on alcohol sales to see how they compared with public costs of excessive drinking. Those costs had been tallied in an earlier study, which based its findings on data from the Centers for Disease Control and Prevention, Naimi said.
While sales taxes have kept up with inflation, some of the other types of taxes have not, the researchers found. That’s because excise taxes aren’t based on the price of the product, Naimi said. Rather, they are imposed at the wholesale level and are assessed per unit of volume – per barrel of beer, for example.
Those excise taxes have eroded over time as a result of inflation, the researchers note, adding that another recent study found alcohol-specific state excise taxes had declined, on average, by about 30% across all beverage types between 1991 and 2015.
The researchers calculated that state alcohol taxes brought in an average of $0.13 per drink, with Delaware at the low end of the scale at $0.03 and Tennessee at the high end at $0.27 per drink. When Naimi and his colleagues added in the average value of federal taxes per drink, the total average tax amounted to $0.21 per drink.
The new study highlights the financial price of excess alcohol consumption and the fact that taxes don’t remotely cover those costs, said Dr. Ramon Battaler, chief of hepatology at UPMC in Pittsburgh.
Moreover, this study doesn’t include all the societal costs, Battaler said. “And it is uncertain how much of these taxes go to repair or to cover the medical costs,” he added.
The reason you don’t see an increase in taxes is that there are powerful lobbies fighting against it, Battaler said, adding that taxes are much higher in Europe.
Beyond recapturing some of the monetary costs of excess drinking, higher taxes could result in fewer people engaging in the kind of drinking that endangers their health and the health of others, Battaler said, pointing to the example of taxes on cigarettes.
There was a push for higher cigarette taxes not only to bring in more revenue, but also to discourage smoking, Battaler said. “That was proven to be effective in this country,” he added.
“Increasing alcohol taxes has been proven to decrease abusive drinking in the UK,” Battaler noted. “This is well demonstrated scientifically.”
SOURCE: bit.ly/2ka7HHY Journal of Studies on Alcohol and Drugs, online September 10, 2019.