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Alcohol Tax Hikes Prove Popular in Poll |
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December 8, 2005
As lawmakers consider slashing popular social programs to bridge the federal budget gap, CSPI says they should instead consider raising taxes on beer, wine, and spirits -- which could raise more than $20 billion in desperately needed revenue over the next five years. When asked whether they prefer raising alcohol taxes or cutting social programs as a way of offsetting the budget deficit, a whopping 79 percent of respondents favor the alcohol tax increase. Even 68 percent of Republicans surveyed and 70 percent of drinkers would support raising alcohol taxes over cutting programs such as food stamps, Medicaid, and drug benefits for the elderly. "Raising alcohol taxes alone may not balance the budget, but it would boost revenues in a way that's popular, fair, and provides real money," said George A. Hacker, director of CSPI's alcohol policies project. "In past decades, alcohol interests have too often beaten back any across-the-board increases in booze taxes. But with an expensive war being waged, and with painful cuts in popular social programs on the table, we can't let one politically powerful industry keep evading its fair share," Hacker added. In recent decades, federal taxes on alcoholic beverages have effectively fallen dramatically due to inflation. That's because such taxes are typically assessed not as a percentage of the purchase price, but as a flat dollar amount. Those levies have been raised only once for beer and wine, and only twice for liquor in the past 55 years. Had the federal tax on beer merely kept pace with inflation, it would be more than triple what it is today. Liquor taxes would have increased sixfold. Most Americans would be largely unaffected by increases in alcohol taxes. More than one-third don't drink at all, and most others drink only occasionally. Eighty percent of the alcohol consumed in America is downed by twenty percent of the drinkers. According to the Adams Beer Handbook, more than half of beer and liquor drinkers have incomes above $60,000 a year. "Cutting social programs such as Medicaid, Medicare, and food stamps is an absolutely unconscionable way to cut the deficit so long as lawmakers are leaving billions in alcohol tax increases off the table," said Hacker. "Especially when one considers that the $18 billion in current state and federal alcohol tax collections barely cover a tenth of the $185-billion price tag of underage drinking, alcohol abuse, and drunk-driving. Congress last found the courage to raise alcohol taxes in the Reconciliation Act of 1990, and it should follow that precedent today." Last May, 59 prominent economists, including four Nobel laureates, called on Congress to raise alcohol taxes to help offset the massive economic and social costs of alcohol. Henry Aaron, a senior fellow in economic studies at the Brookings Institution, said that lawmakers "would be well advised to increase a tax that would help close the federal deficit and discourage the continued epidemic of alcohol abuse." In its 2005 budget options report for Congress, the Congressional Budget Office estimated that raising the tax on distilled spirits to $16 per proof gallon from the current rate of $13.50 and equalizing the rate of tax on the alcohol in beer and wine to that level would yield $27 billion in new revenue over the next five years. Numerous researchers have concluded that higher taxes would lead to slightly less drinking, and could cut the incidence of alcohol problems and their costs. A nickel-a-drink tax increase might save as much as $5 billion per year. Earmarking some of the revenues for alcohol treatment, prevention, and public education could further reduce the societal toll of alcohol problems, according to CSPI. CSPI's survey was of a nationally representative sample of 512 American adults. The survey was conducted in mid-November via telephone by the Global Strategy Group polling firm. The margin of error is plus or minus 4.3 percent. Report Your Experience
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