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Preventing Excessive Alcohol Consumption: Increasing Alcohol Taxes

Alcohol excise taxes affect the price of alcohol, and are intended to reduce alcohol-related harms, raise revenue, or both. Alcohol taxes are implemented at the state and federal level, and are beverage-specific (i.e., they differ for beer, wine and spirits). These taxes are usually based on the amount of beverage purchased (not on the sales price), so their effects can erode over time due to inflation if they are not adjusted regularly.

Summary of Task Force Recommendations and Findings

The Community Preventive Services Task Force recommends increasing the unit price of alcohol by raising taxes based on strong evidence of effectiveness for reducing excessive alcohol consumption and related harms. Public health effects are expected to be proportional to the size of the tax increase.

Task Force Finding

Results from the Systematic Review

Seventy-three studies qualified for the review.

  • The studies looked at the relationship between either tax rates or total price on measures related to excessive alcohol consumption or its related harms.
  • The effects of prices on consumption or other outcomes are often expressed as “elasticities,” that are defined as the expected percentage change in the outcome when the price increases by 1%. For example, an alcohol price elasticity of -0.50 would mean that the outcome of interest (e.g., alcohol consumption) would be expected to decrease by 5% for every 10% increase in price.

Alcohol price and per capita consumption

  • Price elasticity of alcohol consumption (i.e., the expected percentage change in alcohol consumption when the price increases by 1%)
    • Beer consumption: -0.50 (interquartile interval [IQI]: -0.91 to -0.36; 18 studies)
    • Wine consumption: -0.64 (IQI: -1.03 to -0.38; 22 studies)
    • Spirits consumption: -0.79 (IQI: -0.90 to -0.24; 21 studies)
    • Total alcohol (ethanol) consumption: -0.77 (IQI: -2.00 to -0.50; 11 studies)
  • Price and consumption by high school or college age youth
    • Six studies found consistent evidence that higher alcohol prices were associated with less youth drinking; 3 studies found mixed results (9 studies).

Alcohol price and alcohol-related harms

  • Higher alcohol prices or taxes were consistently related to:
    • Fewer motor vehicle crashes and fatalities (10 of 11 studies)
    • Less alcohol-impaired driving (3 of 3 studies)
    • Less mortality from liver cirrhosis (5 of 5 studies)
    • Less all-cause mortality (1 study)
  • Effects also were demonstrated for measures of violence (3 studies), sexually transmitted diseases (1 study), and alcohol dependence (1 study).

These results were based on a systematic review of all available studies, conducted on behalf of the Task Force by a team of specialists in systematic review methods, and in research, practice and policy related to excessive alcohol consumption.

Economic Evidence

Two studies assessed the economic costs and benefits of alcohol tax intervention. All monetary values are reported in 2007 US dollars.

  • Cost-effectiveness was measured using disability-adjusted life-years (DALYs) which express both time lost due to premature death and time spent disabled by disease or accident.
  • Alcohol tax of 20% of the pretax retail price offered net cost savings (one study).
  • Intervention costs were $482,956 per 1 million people per year and the average cost-effectiveness ratio was approximately $395 per DALYs averted, a good value for money based on the per capita income of included countries (one study).

Supporting Materials

Publications

Elder RW, Lawrence B, Ferguson A, Naimi TS, Brewer RD, Chattopadhyay SK, Toomey TL, Fielding JE, Task Force on Community Preventive Services. The effectiveness of tax policy interventions for reducing excessive alcohol consumption and related harms. Adobe PDF File [PDF - 665 kB] Am J Prev Med 2010;38(2):217-29.

Task Force on Community Preventive Services. Increasing alcohol beverage taxes is recommended to reduce excessive alcohol consumption and related harms. Adobe PDF File [PDF - 116 kB] Am J Prev Med 2010;38(2):230-2.

Read other Community Guide publications about Preventing Excessive Alcohol Consumption in our library.

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Disclaimer

The findings and conclusions on this page are those of the Community Preventive Services Task Force and do not necessarily represent those of CDC. Task Force evidence-based recommendations are not mandates for compliance or spending. Instead, they provide information and options for decision makers and stakeholders to consider when determining which programs, services, and policies best meet the needs, preferences, available resources, and constraints of their constituents.

Sample Citation

The content of publications of the Guide to Community Preventive Services is in the public domain. Citation as to source, however, is appreciated. Sample citation: Guide to Community Preventive Services. Preventing excessive alcohol consumption: increasing alcohol taxes. www.thecommunityguide.org/alcohol/increasingtaxes.html. Last updated: MM/DD/YYYY.

Review completed: June 2007