Raising Alcohol Taxes and Prices

Taxes on alcohol have not increased at the rate of inflation; therefore, it is actually cheaper to buy alcohol today than it was 50 years ago. These sluggish tax rates have led to an actual decline in the price of alcohol over the past few decades. Alcohol is relatively inexpensive to purchase – sometimes even cheaper than soft drinks – and local bar promotions such as two-for-one specials make it even more affordable for students to drink to excess.

According to the National Institute on Alcohol Abuse and Alcoholism, lower prices on alcohol are associated with drinking more frequently and in greater quantities, especially among underage drinkers. Raising alcohol taxes by even a few cents would be beneficial because this new source of revenue could be used in some states for traffic safety, for public health programs to prevent underage drinking, and to provide alcoholism treatment. Moreover, increasing alcohol taxes would reduce traffic-related fatalities and some crime, and decrease alcohol-related health consequences.

Campus and communities can work together to make alcohol less affordable for students. Local taxes, such as a “nickel a drink” tax for on-site purchases, can be levied. State taxes may be indexed so that the nominal tax rates rise in conjunction with prices. The price of all alcoholic beverages can be raised through excise taxes. (An excise tax is a tax imposed on the purchase of a specific type of good or service, such as alcohol.) Finally, campus and community groups can work to ban happy hours and discount drink promotions, which are often geared toward students.