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Alcohol taxes

Health Factors: Alcohol & Drug Use
Decision Makers: Local Government State Government
Evidence Rating: Scientifically Supported
Population Reach: 50-99% of WI's population
Impact on Disparities: Likely to decrease disparities

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Description

States and municipalities can add an excise tax or a sales tax to alcoholic beverages, increasing the price paid for such beverages. Alcohol excise taxes are usually based on the volume of beverage purchased while sales taxes charge a percentage of a product’s cost. The effects of excise taxes on price can erode over time due to inflation if taxes are not adjusted regularly; sales taxes increase with price changes so are not affected by inflation. Sales and excise taxes can be implemented simultaneously or separately. Tax amounts often differ for beer, wine, and liquor (CG-Alcohol, Mosher 2017).

Expected Beneficial Outcomes

Reduced excessive drinking
Reduced alcohol-related harms
Reduced underage drinking
Reduced violence
Reduced incidence of STIs

Evidence of Effectiveness

There is strong evidence that increasing alcohol taxes reduces excessive alcohol consumption and related harms (CG-Alcohol, Wagenaar 2009, Wagenaar 2010). Alcohol consumption decreases when alcohol prices increase; effects have been shown for beer, wine, and spirits (CG-Alcohol, Wagenaar 2009, Giesbrecht 2016, Esser 2016). Higher alcohol prices, often achieved through tax increases, are also associated with lower levels of drinking among high school and college-age youth (CG-Alcohol).

Higher alcohol prices reduce alcohol-related harms such as motor vehicle crashes and fatalities, alcohol-impaired driving (CG-Alcohol, Wagenaar 2010, Wagenaar 2015), and mortality from liver cirrhosis (CG-Alcohol). Alcohol tax increases may also reduce violence (CG-Alcohol, Wagenaar 2010) and reduce sexually transmitted infections (STIs) (Wagenaar 2010, Staras 2014, Staras 2016), particularly among non-Hispanic blacks (Staras 2014). Public health effects are expected to be proportional to the size of the tax increase (CG-Alcohol).

Alcohol taxation and pricing policies appear to have a greater effect on alcohol consumption and alcohol-related deaths for individuals with low incomes than individuals with higher incomes (Meier 2016), youth than adults (Meier 2016, Giesbrecht 2016), and heavy drinkers than moderate drinkers (Giesbrecht 2016).

A 2004 Institute of Medicine report recommends placing top priority on beer taxes and indexing excise tax rates for all alcoholic beverages to the consumer price index so that they keep pace with inflation without further legislative action (IOM-Underage drinking 2004).

Implementation

United States

Alcohol tax rates vary by state and by type of alcohol. As of January 2017, state excise taxes ranged from $1.50 (MD, DC) to $14.27 (WA) per gallon of spirits, $0.20 (CA) to $2.50 (AK) per gallon of wine, and $0.02 (WY) to $1.29 (TN) per gallon of beer. Most states also levy sales taxes on spirits, wine, and beer (TPC-Alcohol tax 2017).

Wisconsin

Wisconsin has one of lowest beer excise taxes in the country ($0.06 per gallon); Wyoming is the only state with a lower rate. Wisconsin’s excise taxes for liquor and wine are $3.25 and $0.25 per gallon, respectively. Wisconsin also applies a 5% sales tax to alcoholic beverages (TPC-Alcohol tax 2017).

Implementation Resources

APIS - Alcohol Policy Information System (APIS). Welcome to the Alcohol Policy Information System. Accessed on May 16, 2017
TPC-Alcohol tax 2017 - Tax Policy Center (TPC). Alcohol Rates 2000-2010, 2013-2017. Accessed on May 16, 2017

Citations - Description

CG-Alcohol - The Guide to Community Preventive Services (The Community Guide). Excessive alcohol consumption. Accessed on May 16, 2017
Mosher 2017* - Mosher JF, Adler SS, Pamukcu AM, Treffers RD. Review of state laws restricting local authority to impose alcohol taxes in the United States. Journal of Studies on Alcohol and Drugs. 2017;78(2):241-248. Accessed on May 16, 2017

Citations - Evidence

CG-Alcohol - The Guide to Community Preventive Services (The Community Guide). Excessive alcohol consumption. Accessed on May 16, 2017
Esser 2016* - Esser MB, Waters H, Smart M, Jernigan DH. Impact of Maryland’s 2011 alcohol sales tax increase on alcoholic beverage sales. The American Journal of Drug and Alcohol Abuse. 2016;42(4):404-411. Accessed on May 16, 2017
Giesbrecht 2016 - Giesbrecht N, Wettlaufer A, Cukier S, Geddie G, Gonçalves A-H, Reisdorfer E. Do alcohol pricing and availability policies have differential effects on sub-populations? A commentary. International Journal of Alcohol and Drug Research. 2016;5(3):89-99. Accessed on May 16, 2017
IOM-Underage drinking 2004 - Institute of Medicine (IOM), National Research Council (NRC), Committee on Developing a Strategy to Reduce and Prevent Underage Drinking, Board on Children, Youth, and Families (BCYF). Reducing underage drinking: A collective responsibility. (Bonnie RJ, O’Connell ME, eds.). Washington, DC: National Academies Press; 2004. Accessed on May 16, 2017
Meier 2016 - Meier PS, Holmes J, Angus C, Ally AK, Meng Y, Brennan A. Estimated effects of different alcohol taxation and price policies on health inequalities: A mathematical modelling study. PLoS Medicine. 2016;13(2):1-27. Accessed on May 16, 2017
Staras 2014 - Staras SAS, Livingston MD, Christou AM, Jernigan DH, Wagenaar AC. Heterogeneous population effects of an alcohol excise tax increase on sexually transmitted infections morbidity. Addiction. 2014;109(6):904-912. Accessed on May 16, 2017
Staras 2016* - Staras SAS, Livingston MD, Wagenaar AC. Maryland alcohol sales tax and sexually transmitted infections: A natural experiment. American Journal of Preventive Medicine. 2016;50(3):e73-e80. Accessed on May 16, 2017
Wagenaar 2009* - Wagenaar AC, Salois MJ, Komro KA. Effects of beverage alcohol price and tax levels on drinking: A meta-analysis of 1003 estimates from 112 studies. Addiction. 2009;104(2):179-90. Accessed on May 16, 2017
Wagenaar 2010 - Wagenaar AC, Tobler AL, Komro KA. Effects of alcohol tax and price policies on morbidity and mortality: A systematic review. American Journal of Public Health. 2010;100(11):2270-8. Accessed on May 16, 2017
Wagenaar 2015* - Wagenaar AC, Livingston MD, Staras SS. Effects of a 2009 Illinois alcohol tax increase on fatal motor vehicle crashes. American Journal of Public Health. 2015;105(9):1880-1885. Accessed on May 16, 2017

Citations - Implementation

TPC-Alcohol tax 2017 - Tax Policy Center (TPC). Alcohol Rates 2000-2010, 2013-2017. Accessed on May 16, 2017

Page Last Updated

May 12, 2017

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