How to fill the budget gap - increase alcohol taxes
The Marin Institute in the USA is advocating a particular solution to the deficits in public finances being experienced by many countries as a result of the global financial crisis – increasing taxes on alcohol products. Increasing alcohol taxes, the Marin Institute says, not only increases state revenues, it also reduces the burden of costs arising from alcohol harm.
In its home state of California the Marin pressed Governor Arnold Schwarzenegger and other senior politicians to include a new 25 cent-per-drink alcohol tax in any new budget proposal to help the state recover from its current economic meltdown.
“California’s budget has tanked, the Governor’s propositions have failed, and now is the time for true leadership in Sacramento,” said Marin Institute Executive Director Bruce Lee Livingston. “The citizens are waking up to the failure of policymakers. The alcohol tax should be back on the table to help ease California’s budget crisis.”
The Marin explained that despite being the largest alcohol market in the USA, California’s current beer, spirits, and wine excise tax rates, which have not been raised in 18 years, were lower than the national average. Only Louisiana has a lower wine tax rate than California.
An across the board quarter-adrink increase in California’s alcohol excise tax would produce $3.44 billion in new revenue for the state’s general fund. The new alcohol tax revenues would help solve significant budget shortfalls and fund critical programs such as prevention, treatment, emergency room and trauma care, healthcare, mental health, crime prevention and traffic safety.
“Not only will the state budget benefit from this rising tide of new revenue,” said Livingston, “but alcohol tax increases will reduce alcohol-related harm in the state.”
According to the American national Institute on Alcohol Abuse and Alcoholism, higher alcohol taxes lead to reductions in the frequency of drinking and heavy drinking among youth, lower traffic fatalities, and reduced incidences of alcohol-related crime.
Alcohol Tax Calculator
As part of its campaign for higher alcohol taxes the Marin has devised an alcohol tax calculator. While Marin’s calculator applies only to the United States, the idea could of course in principle be extended to any jurisdiction, so long as the required data are available.
“It looks simple,” said Michele Simon, research and policy director at Marin Institute. “But the calculations behind the scenes are anything but simple. This is a serious tool for lawmakers and advocates who need fast, accurate numbers.”
The powerful online program works for every state, as well the federal government and the District of Columbia. The user just enters the amount of new tax (nickel or dime a drink, for example) for beer, wine or spirits (or any combination). Then the program instantly estimates additional annual revenue, based on a variety of factors specific to that particular jurisdiction.
The Marin developed the tool in response to inquiries from states looking for new revenue sources while holding `Big Alcohol’ accountable for the enormous harm its products cause.
“Our new alcohol tax calculator will help state lawmakers raise significant new funds to help solve budget shortfalls and fund critical programs such as prevention, treatment, emergency room and trauma care, healthcare, mental health, crime prevention and traffic safety,” added Simon. “An increase in federal alcohol taxes (not raised since 1991) could also fund President Obama’s healthcare agenda. It’s a win-win solution for governments and the people.”
The user-friendly calculator can be found at www.MarinInstitute.org.