Why Raise Alcohol Taxes?
In the past 55 years, the federal excise tax on beer has been raised just once, in 1991, under the Revenue Reconciliation Act of 1990. In the past 20 years, 31 states have not raised their beer taxes. Failure to adjust those tax rates for inflation has caused a dramatic decline in their value and resulted in a loss of billions of dollars in potential revenues that could have helped fund essential health and human needs programs or reduce the deficit. A 2008 report of the Congressional Budget Office estimated that modestly increasing and reforming federal alcohol taxes could generate more than $28 billion in new revenue over five years. Resulting reductions in problem drinking would produce further significant savings in health care expenditures (for both the drinker and affected family members), and decreased law enforcement and other alcohol-related costs.
Dormant tax rates have also contributed to a gradual and substantial decline in the price of alcoholic beverages. According to the National Institute on Alcohol Abuse and Alcoholism (NIAAA), lower prices on alcohol are associated with increased levels and frequency of drinking, particularly among underage persons. Aside from providing a source of new revenue, increasing taxes on alcohol will deter underage use, reduce traffic-crash fatalities and certain crimes, and decrease alcohol-related health problems such as cirrhosis. Alcohol use is the 3rd leading cause of early mortality in the U.S. and, like, tobacco, imposes enormous economic costs on society—some $185 billion per year according to the latest government estimates. Even small increases in taxes—pennies per drink—would translate into significant new revenues. Alcohol taxes do not disproportionately target low-income people—who already drink at lower rates than those with higher incomes—and will be of little, if any, burden on the vast majority of consumers. Revenues from alcohol continue to be of more importance these days, as our nation and at least 41 states struggle to overcome budget deficits.
The Federal Front
Advocacy Action Guides
State Alcohol Tax History, 2002-2005
Alcohol Tax Calculator: Project the Effects of Varying Increases in Alcohol Tax Rates on Revenues, Consumption and Product Prices
Sample Presentation Materials
Sample State Reports