Should Alcohol Taxes Be Raised?
6 Pages Posted: 8 Oct 2009
Date Written: October 7, 2009
As a percentage of price, alcohol taxes have fallen by half over the past quarter-century. This article considers the question of whether those taxes should now be raised. It examines Pigouvian arguments for increased taxes to counter negative externalities from alcohol and finds them ambiguous: there is some evidence that current tax rates are already too high, while other evidence supports a higher tax. The article does find some support for the argument that alcohol taxes are a more efficient way to raise government revenue than other forms of taxation, but the evidence on this is not definitive. The paper includes an appended comment from Jeffrey Miron.
Keywords: alcohol taxation, sin tax, Pigouvian tax
JEL Classification: D60, H21, H20, H23, H27, I10, I30
Suggested Citation: Suggested Citation