Alcohol consumption and Tax Differentials Between Beer, Wine and Spirits

Henry Saffer ()

No 3200, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Several public health interest groups in the United States have recently called for equalization of the federal tax on a unit of alcohol in beer, in wine and in spirits. This paper provides some new empirical evidence of what effect alcohol tax differentials have on total alcohol consumption. The data indicate that the greatest decrease in alcohol consumption results from an increase in spirits taxes, followed by beer taxes and then wine taxes. This suggests that the existing generally accepted taxation policy of placing the highest tax on spirits, a lower tax on beer, and the lowest tax on wine, results in the greatest reduction in total alcohol consumption.

Date: 1989-12
Note: EH
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Published as "Alcohol Tax Equalization and Social Costs, Henry Saffer and Frank Chaloupka, Eastern Economic Journal, vol. 20, no. 1, Winter 1994

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