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Monday, September 27, 2010

Tax Booze, Save Lives

I've reported previously that a a simple penny-per-ounce hooch tax could raise $29 million per year to help ease South Dakota's budget woes. A new metastudy from University of Florida epidemiologist Alexander Wagenaar finds that simply increasing the tax on alcohol to keep up with inflation could save thousands of lives and save millions in health care costs:

Wagenaar and his colleagues identified 50 papers published over the last 40 years that looked at how changes in alcohol prices affect health outcomes. These studies were mainly conducted in the United States, Canada and Scandinavia.

Their analysis showed that, on average, a doubling of the alcohol tax was associated with a 35 percent decrease in alcohol-related mortality (such as death from liver disease), an 11 percent decrease in deaths from traffic accidents, a 6 percent decrease in sexually transmitted diseases, a 2 percent decrease in violence and a 1.4 percent reduction in crime [Rachel Rettner, "A Hike in the Price of Booze Could Make Us All Healthier," LiveScience.com, 2010.09.24].

Wagenaar says, "The strength of these findings suggests that tax increases may be the most effective way we have to prevent excessive drinking—and also have drinkers pay more of their fair share for the damages caused and costs incurred."

Plug the South Dakota budget hole; make South Dakota's drinkers pay a fairer share of the cost of their irresponsibility; reduce death, disease, and destruction—sounds like a good plan from every direction.
Update 2010.09.28: Then again, my teetoalling may be shortening my life expectancy. Cheers!


  1. I'm sure not buying that Cory. Unless the reason people seek the escape is alleviated they will still reach out for alcohol or something else. The article also points out "Drinking culture might not change very fast even if the alcohol policy changes." A link at the bottom offers a better solution, if we're willing to learn from Peter the Great. He required all men that sported a beard to pay a yearly tax. They were also forced to wear a medal proclaiming, "Beards are a ridiculous ornament." John Hess

  2. On the other hand, everybody swears that hiking the cost of cigarettes has cut the smoking rate in America at large. You get up above a certain $ amount, and people simply can't afford it. Personally, I've said for years that if you really want to plug the budget hole, slap a nickel tax on every soft drink sold...

  3. Better would be to admit the war on drugs is a failure, legalize those less dangerous, get organized crime out of it, make it safe to consume, tax it, balance the budget, and offer counseling and improved education so people develop healthier coping mechanisms to change the culture for the long run. There's a reason people want this stuff (for that matter soda pop and comfort food), but trying to make them inaccessible doesn't work. John Hess

  4. Sin taxes, whether on alcohol, tobacco or sugary drinks are probably fine and maybe they decrease usage as the tax goes up, but the problem is, "where does the money go that is raised?" Has tobacco use measurably decreased since the state pounded cigarettes with increased taxes? Did everyone go across state lines to buy?

    Every tax from video lottery to social security is always promised to support a certain cause, but greedy fingers get into those accounts and move them to other general needs. That's why higher sin taxes don't always relate to healthier living.

    If those dollars were designated specifically and solely for health education, tobacco cessation, alcohol treatment and diet education programs it might be worthwhile.

    As long as money can be diverted to other favored causes, nothing will change, except that government will continue to grow with little benefit to the taxpayer.

  5. Rod, you help me sell the idea, and I'll help make sure that the money is spent for the public good, not just for the sake of expanding government. Heck, get the deficit fixed, and I could even agree to use the sin tax to replace/reduce other taxes. How we use the money is an important debate... but the Wagenaar meta-study seems to make clear that getting the money from this source is a pretty good idea.

    John: yes, we do still have a lot of cultural problems to solve. Alcohol abuse is a symptom of despair, poverty, lack of education, etc., and taking alcohol away doesn't solve those problems. But making alcohol more expensive appears to have some benefits and would help pay for the externalities caused by alcohol use.

    Eve: that soda tax might not be a bad idea, either!

  6. The only problem with sin taxes, just like with taxes on food and video lottery for that matter, is that it adversely affects those than can least afford it the most.

    Saw it first hand when living in Ohio. Cleveland used sin taxes to help pay for their new stadiums and the funny thing was that the people that ended up paying most of the sin taxes couldn't afford to go to the games at the stadiums they paid for.

    As others here have said, using the money for programs directly affecting the results of alcohol and tobacco usage is one thing, funding government with it is another altogether.

  7. Bob Schwartz has a point, but only if all taxes worked as he suggests.

    Direct taxes on alcohol don't cover even a small fraction of the total unnecessary social costs they generate.

    If drunken driving is to be controlled, the liquor industry has to be made responsible for the damage they produce. A start to give them some incentive to clean up their acts would be to require every establishment selling alcohol or alcoholic beverages would be closed for a day one week after a fatal traffic crash involving alcohol consumption.

    Now, figure out some way to get cellphone manufacturers and utilities to prevent texting while driving.

  8. Direct taxes on alcohol don't cover even a small fraction of the total unnecessary social costs they generate.

    Unfortunately Douglas, most sin taxes collected aren't even used to help with the social costs anyway. Claims are often made when trying to get approval that the higher taxes make it more difficult for many to abuse but I believe it is just an excuse to get the public approval usually needed to get the extra tax passed.

    Oh and as for the technology to prevent texting why driving, it already exists and could be used on all phones that utilize location services like GPS. Software needs only need to be used that recognizes a phone is moving over a certain speed and disable the texting function. I am aware of at least one app for Android phones that does just that though I am sure other operating systems have similar programs.

  9. Bob, I wondered about GPS in phones detecting movement, etc. That seems to have real potential for abuse and privacy invasion...probably is already being used for that unfortunately.

    "Sin Taxes" may be appropriate, but higher taxes on alcohol and tighter restriction on liquor industry might better be called "rational taxes".


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