A Healthy Return on Your Town Hall Meeting Investment—Getting to Outcomes: Increased Taxes on Alcohol Sales
03/28/2012
Many communities already are realizing a healthy return on their investments in underage drinking prevention, even though they may not be aware of the many reasons why or the exact dollar amount. Fewer underage drinkers mean fewer costly consequences, such as alcohol-related traffic fatalities, crime, and violence, that affect all of us. In fact, the national price tag for underage drinking that does occur is enormous—as much as $62 billion for 2010 alone. One way to help reduce the social burden of underage drinking, as well as excessive drinking in general, is to raise the cost of alcohol by increasing the excise tax on its sale. The overall price of alcohol affects how much people will consume, which, in turn, affects the number of alcohol-related problems they will cause or experience. A 2012 Town Hall Meeting, sponsored by the Substance Abuse and Mental Health Services Administration (SAMHSA), may be the perfect venue for engaging your community in advocating for higher taxes on alcohol sales.
What are taxes on alcohol?
Taxes on the sale of alcohol are imposed primarily by the Federal and State governments, but they also can be levied at the local or county level. Current tax rates are beverage specific, meaning they differ for beer, wine, and distilled spirits (or liquor), and they generally are based on a set rate per unit volume. In addition, liquor is usually taxed at much higher rates on a per-drink basis. In “control” States, where the State completely manages the sale of liquor and sometimes wine, the tax takes the form of a percentage markup on the wholesale price of the product. The actual collection of these taxes varies according to State law.
State and local governments can take steps to raise tax rates both to reduce underage drinking and to help pay the costs for law enforcement, emergency medical services, health care, and other services related to underage drinking.
How do increased taxes on alcohol reduce underage drinking?
Increasing alcohol excise taxes is a type of environmental prevention1 that has shown consistent and positive results in reducing harmful drinking. As with any product, higher costs generally result in lower demand. A landmark study in 2010 found strong evidence that raising alcohol excise taxes, which raises the price, is effective in reducing excessive alcohol consumption and related harms.2
How can my community take this action?
Take the following steps to help raise alcohol taxes in your area:
- Assess current tax rates in your State and learn about the Federal tax. Check with your Alcohol Beverage Control (ABC) Board or revenue department to find out how excise taxes are levied in your State. The Alcohol and Tobacco Tax and Trade Bureau lists contact information for ABC Boards in the United States, Puerto Rico, and Canada. Other sources of information to use in evaluating and comparing alcohol tax rates in your locale are:
- Prepare a campaign to increase taxes on sales of alcohol. The publication State Alcohol Taxes and Health: A Citizen’s Action Guide, by the Center for Science in the Public Interest, is a comprehensive resource that you can use in your efforts.
- Build community support for increased taxes on sales of alcohol from law makers, key stakeholders, and other community members. Public awareness activities can help the community understand that when higher taxes on alcohol are in place, underage drinking and alcohol-related problems decrease.
- Measure and report successful outcomes to help demonstrate effectiveness and sustain tax increases. Some measures of the effectiveness of alcohol sales tax increases are:
- Rates of youth motor vehicle crashes and injuries;
- Rates of arrests and convictions while driving under the influence;
- Number and types of arrests for alcohol-related violations; and
- Actual price of alcohol.
Notes
1 Effective environmental prevention targets four key areas that influence alcohol problems: access and availability, policy and enforcement, community norms, and media messages. Research shows that policies that change the context of the environment, limit access to alcohol, and prevent harmful behavior will result in reduced alcohol use, including underage drinking.
2 Elder, R. W., Lawrence, B., Ferguson, A., Naimi, T. S., Brewer, R. D., Chattopadhyay, S. K., et al. (2010). The effectiveness of tax policy interventions for reducing excessive alcohol consumption and related harms. American Journal of Preventive Medicine, 38(2), 217–229.
Helpful Resources
Centers for Disease Control and Prevention’s The Health Communicator’s Social Media Toolkit has information to expand your organization’s outreach.
Community Anti-Drug Coalitions of America/Center for Science in the Public Interest’s Strategizer 37: Increasing Alcohol Taxes to Fund Programs to Prevent and Treat Youth-Related Alcohol Problems offers facts and strategies to promote increased taxation and counter arguments against tax increases.
SAMHSA’s Focus on Prevention guides communities in planning and delivering substance abuse prevention strategies, including assessing needs, identifying partners, creating effective strategies, and evaluating programs.
SAMHSA’s Substance Abuse Prevention Dollars and Cents: A Cost-Benefit Analysis describes cost savings that could be gained if effective prevention policies, programs, and services were implemented nationwide.