In Alaska, Tax Hike on Alcohol Leads to Fewer Deaths

"Sin taxes" are known to modify behavior a bit, but small adjustments may reap bigger rewards than expected.
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"Sin taxes" are known to modify behavior a bit, but small adjustments may reap bigger rewards than expected.

In the first study to directly measure the impact of state alcohol tax changes on deaths from alcohol-related diseases, researchers discovered that raising alcohol taxes had two to four times the impact of other common prevention efforts, including school programs and media campaigns.

In addition, boosting taxes on beer, wine and liquor immediately reduces the number of fatalities from alcohol-related diseases such as alcohol poisoning, liver disease, and oral or breast cancers.

"The findings are quite astounding," said Alexander C. Wagenaar of the University of Florida College of Medicine, lead author of the study that appeared in the online edition of the American Journal of Public Health, which was funded by the Substance Abuse Policy Research Program of the Robert Wood Johnson Foundation.

"A simple adjustment of the tax rate resulted in a substantial drop in the death rate."

Earlier research has shown that increasing prices is a great way to regulate alcohol, with underage drinkers especially responsive to higher prices.

The tax researchers studied two different tax hikes on alcoholic beverages in 1983 and 2002 in Alaska, and tracked the number of people who died from alcohol-related diseases in the state for years preceding and following the tax increases. The authors decided to examine Alaska because it was one of the first states to institute a substantial tax hike: In 1983, Alaska's tax on beer increased to 63 cents per gallon from 46 cents the year before, and increased to $1.20 in 2002.

"Alaska was cognizant of its alcohol problems and decided do something meaningful. We are now benefiting from the results of their unique experiment which shows what other states could gain if they were to implement a similar tax increase," Wagenaar said.

Factoring in nationwide trends-because of improved health care and other factors-and running comparisons with other states, the authors discovered that the 1983 tax increase was immediately followed by a 29 percent plunge in deaths; the 2002 tax increase reduced the number of deaths by 11 percent. The tax increase was also found to have a lasting impact.

"The bottom line is that when we see an intervention that can reduce the death rate of any chronic disease such as cancer or heart disease by a few percent across the whole population, we consider it an important success," Wagenaar said. "In this case, the death rate for alcohol-related diseases dropped suddenly by at least 11 percent and at minimal cost."