The Impact of a 25 Cent-Per-Drink Alcohol Tax Increase: Who Pays the Tab?
Abstract
Background
Heavy alcohol consumption causes 79,000 deaths annually in the U.S., shortening the lives of those who die by approximately 30 years. Although alcohol taxation is an effective measure to reduce heavy consumption and related harms, some argue that increasing alcohol taxes places an unfair economic burden on “responsible” alcohol users and socially disadvantaged persons.
Purpose
To examine the impact of a hypothetical tax increase based on alcohol consumption and socio-demographic characteristics of current alcohol users, individually and in aggregate.
Methods
Data from the 2008 Behavioral Risk Factor Surveillance System survey was analyzed from 2010–2011 to determine the net financial impact of a hypothetical 25 cent-per-unit tax increase on current alcohol users in the U.S. Higher-risk users were defined as those whose past-30 day consumption included binge alcohol use, heavy alcohol use, alcohol use in excess of the U.S. Dietary Guidelines, and alcohol-impaired driving.
Results
Of current alcohol users in the U.S., 50.4% (or approximately 25% of the total U.S. population) were classified as higher-risk alcohol users. The tax increase would result in a 9.2% reduction in alcohol consumption, including an 11.4% reduction in heavy alcohol use. Compared with lower-risk alcohol users, higher-risk users paid 4.7 times more in net increased annual per capita taxes, and paid 82.7% of net increased annual aggregate taxes. Lower-risk users paid less than $30 in net increased taxes annually. In aggregate, groups who paid the most in net tax increases included those who were white, male, between the ages of 21 and 50, earning ≥$50,000 per year, employed, and had a college degree.
Conclusions
A 25 cent-per-unit alcohol tax increase would reduce heavy alcohol use, and higher-risk alcohol users would pay the substantial majority of the net tax increase.
