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Alcohol – Excessive Consumption: Increasing Alcohol Taxes

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What the CPSTF Found

About The Systematic Review

The CPSTF finding is based on evidence from a systematic review of 73 studies (search period through October 2007).

The review was conducted on behalf of the CPSTF by a team of specialists in systematic review methods, and in research, practice, and policy related to preventing excessive alcohol consumption.

Context

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Summary of Results

More details about study results are available in the published evidence review pdf icon [PDF - 664 kB].

The systematic review included 73 studies.

  • The studies looked at the relationship between either tax rates or total price and 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 (18 studies)
    • Wine consumption: -0.64 (22 studies)
    • Spirits consumption: -0.79 (21 studies)
    • Total alcohol (ethanol) consumption: -0.77 (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; three 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).

Summary of Economic Evidence

More details about study results are available in the published evidence review pdf icon [PDF - 664 kB].

The economic review included two studies that assessed the economic costs and benefits of alcohol tax intervention. All monetary values are reported in 2007 U.S. 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 accidents.
  • 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)

Applicability

The CPSTF finding should be applicable to high-income countries.

Evidence Gaps

The volume and consistency of the evidence reviewed suggests little need for additional research on the basic questions of whether changes in alcohol taxes and price affect excessive alcohol consumption and related harms. Nonetheless, studies published subsequent to the 2005 cutoff date for this review continue to indicate the public health benefits that accrue from increasing alcohol taxes. For example, a 2009 meta-analysis found very similar mean price elasticities for alcohol consumption as were found in this review (Wagenaar et al., 2009a).

Similarly, a study of alcohol-related disease mortality published in 2009 found that substantial alcohol tax increases in Alaska in 1983 and 2002 resulted in estimated reductions of 29% and 11%, respectively (Wagenaar et al., 2009b).

Additional research and evaluation are needed to answer the following questions and fill existing gaps in the evidence base. (What are evidence gaps?)

  • Do changes in alcohol prices differentially affect drinking behavior and health outcomes for important subgroups of the population, such as underage young people?
  • What are the relative benefits of increasing taxes on all alcoholic beverages simultaneously, compared with selectively increasing taxes on specific beverage types? This research question should be considered in light of known differences in the beverage preferences of binge drinkers, historic changes in tax rates across beverage types, and the effect of inflation on real tax rates by beverage type.
  • What is the impact of different approaches to taxing alcoholic beverages on excessive alcohol consumption and related harms? Specific emphasis should be placed on the impact of alcohol sales taxes, where taxes are calculated as a proportion of the total beverage price; the potential impact of standardizing alcohol taxes across beverage types based on alcohol content; and the potential impact of alcohol taxes levied by local governments on a per-drink basis in on-premise, retail alcohol outlets (i.e., tippler taxes).

Study Characteristics

  • Most studies assessed total alcohol consumption at the societal level (i.e., per capita alcohol consumption). The design of these studies varied between countries.
    • Most studies conducted outside of the United States used interrupted time–series designs. Alcohol taxes in other countries tend to be set at the national level, and as such, it is generally not possible to do intra-country comparisons.
    • In contrast, most of the U.S. studies used a panel study design, in which multiple states were assessed over time, allowing each to serve as a comparison for the others.
  • The remaining studies assessed measures related to excessive drinking (e.g., the prevalence of underage or binge drinking) or alcohol-related harms, the most common being outcomes related to motor-vehicle crashes.

Publications