Alcohol tax won't eliminate problems

Posted: Friday, March 15, 2002

An increase in the alcohol tax can be an important component of a comprehensive package to raise state revenues. Alcohol-related problems are estimated to cost the state hundreds of millions of dollars each year. It is not unreasonable that all consumers of alcohol should pay more to offset these costs. However, to assert that "a dime a drink" is a panacea for alcohol abuse is naive. An increase in the alcohol tax would not reduce drunk driving, access to alcohol by minors, alcoholism, alcohol-related violence or alcohol-related domestic abuse. Alcohol taxes cannot be designated to pay for programs that deal with alcohol abuse problems.

Alaskans are not necessarily under-taxed for alcohol. According to data from the Department of Revenue, our tax rates are 84 percent higher for beer, 41 percent higher for wine and 70 percent higher for liquor than the national median rate. While "a dime a drink" sounds modest, it does reflect a substantial tax increase. That additional "dime," on top of the current four cents tax per serving, is a tax boost of 250 percent.

Some believe the higher cost would discourage abuse, but Iceland and Sweden have among the world's highest alcohol tax rates simultaneous to the highest alcohol abuse rates. Likewise, the high cost of liquor in Alaska's Bush communities does not appear to limit alcohol abuse problems. An alcohol tax increase is a fine idea, but we need to know why we are doing it. Anyone who believes that it would have inherently broader social benefits is probably mistaken and should look to other solutions.

A.F. Grossman


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