Delcher, C., Maldonaldo-Molina, M.M., Wagenaar, A.C.
Addictive Behaviours: 2012(37) p.783–789
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Changing alcohol tax rates in New York state mostly did not significantly affect the number of people who died from alcohol related diseases, perhaps as overall tax rates were still very low, and increases or decreases not always applied to all types of alcohol at once.
Summary Unusually for the USA, New York state has increased and decreased alcohol taxes, sometimes for only one type of beverage, and sometimes for several. Researchers aimed to exploit this variety to examine whether tax rises reduce alcohol-related deaths, and reductions increase deaths. They also aimed to see whether tax changes for just one type of beverage – beer, for example – had a different effect compared to changes that applied to all types. The study was for New York state, which has average drinking levels, and excluded New York City, which levies separate taxes. They focused on the relatively poorly researched issue of deaths from alcohol-related diseases, such as cirrhosis, rather than alcohol consumption or alcohol-related injuries and suicide.
The method involved collecting data for the number of alcohol-related deaths in New York state each month, for 456 months from 1969-2006. The researchers included deaths which were registered as 100 per cent attributable to alcohol, such as those from alcohol poisoning or alcoholic liver disease, and deaths from certain diseases which are in part caused by alcohol, including for example liver cirrhosis. They then examined legal records and calculated the different tax rates for beer, wine and spirits over the years, noting nine occasions when the tax rates for at least one of these changed. Statistical analysis was then performed to see the effect that the tax changes had on mortality rates. An attempt was made to exclude influences All analyses also adjusted for inflation and changes in average income in the state. other than tax changes by checking whether trends in alcohol-related disease death rates in New York state departed from those in other parts of the USA, and from trends in other deaths in New York state. If departures were linked to New York state’s tax changes, it would suggest these tax changes had indeed affected the numbers who died from alcohol-related diseases.
Overall between 1969 and 2006, it was estimated that a $1 per gallon increase in the tax on beer would have been associated with 89 fewer alcohol-related deaths per month. This corresponds to a reduction of just under one (0.82) death per 100,000 of the state’s population, amounting to 34% of all alcohol-related deaths. Extrapolating the figures further, it was estimated that doubling beer taxes would have been associated with a 7% fall in alcohol-related deaths.
In 1990, both beer (from $0.11 per gallon to $0.21) and spirits ($5.29 to $6.44) taxes rose substantially, afterwards alcohol-related deaths fell by 7% per 100,000 of the state population. Proportionately slightly greater tax rises the year before, along with a substantial increase in wine taxes, were not associated with a statistically significant increase in the death rate, but did seem to have obscured the full impact of the later rises.
Smaller simultaneous tax increases on beer, wine and spirits in 1983 were not significantly associated with alcohol-related disease deaths. Neither were a substantial increase in sprits taxes in 1972, nor four small decreases in beer taxes.
Tax increases for all kinds of alcohol simultaneously are more effective at reducing alcohol-related deaths than increases only on one specific kind of alcoholic drink. It should be noted that changes in the alcohol tax rates in New York state can make relatively little difference to the overall price that the consumer pays, with some beer tax reductions amounting to only one to two cents per gallon, which may be too little to have any effect on alcohol mortality.
Simultaneously increasing tax on all kinds of alcohol reduces alcohol-related disease deaths more than increases limited to one kind of drink. The impacts are most noticeable the greater the increases.
One reason for the non-significant results could be that that many of the tax changes were too small to greatly affect the price to the consumer. Results may be most applicable to other US states with, in US terms, an average level of drinking.
commentary Nearly 90 fewer alcohol-related disease deaths per month for every $1 per gallon increase in beer tax sounds impressive, but this is a hypothetical figure, extrapolated from increases which at most reached $0.10 per gallon. Nonetheless, the 7% reduction in alcohol-related disease deaths following the near-doubling of beer duty in 1990, with a concurrent rise in spirit tax, does appear encouraging. Given that other tax changes, both increases and decreases, were not associated with significant changes in mortality, the take-home message seems to be that tax rises have to be both substantial and across the main types of beverages if they are to prevent deaths due alcohol-related disease – not surprising given that, as the researchers note, many of the tax changes were very small and may not have been passed on to consumers.
Although they have examined in detail the relationship between alcohol excise taxes and mortality, the researchers have not produced data on two important links in the causal chain: the overall consumer price of alcohol, and the level of alcohol consumption. If excise taxes lower alcohol-related mortality, they probably do so by raising overall consumer alcohol prices, nudging drinkers to buy and consume less alcohol. But in this study we cannot know whether tax rises did actually lead to higher prices; perhaps retailers lowered profit margins to compensate. Indeed, the ability of retailers to absorb alcohol duty increases, and concerns about below-cost sale of alcohol as a loss leader, have led the UK to consider a minimum price per unit of alcohol rather than duty increases. Likewise, if tax rises had immediately led to falls in consumption followed by decreased mortality, it would have been safer to assume a causal relationship. Given that many of the studied tax price changes were small and close together, and alcohol-related diseases might take many years to develop and result in death, without the consumption data it is harder to securely link mortality to tax.
This finding chimes with the results of one major review, which found strong evidence that tax rises can be effective for reducing alcohol consumption and related harms, but that the impact of this can be expected to be proportional to the size of the consequent price rise. As noted in the Findings analysis of that review, it is well established that higher prices lead to less consumption, but the relationship between taxes and prices is complex - a general rise in tax will not lead to the same proportionate rise in prices across different types of drink sold under different licensing conditions.
It must also be noted that the findings hinge largely on comparing New York state alcohol deaths with those elsewhere in the USA, but we are not provided with any information as to what changes in alcohol taxes may have occurred elsewhere. It is possible, for example, that the apparent decrease in deaths after the 1990 tax increases in New York are really a reflection of other states reducing taxes. Similarly, perhaps the 1989 tax increases did not have a significant impact because other states also increased taxes at that time. An explanation for the lack of impact of these increases is needed, as the increases were larger – especially for wine – than the changes in 1990, which were judged to have an impact.
Importantly, the rates of alcohol duty in New York state quoted in the study, even at their highest, were much lower than in the UK. Quick calculations The current rate of alcohol duty in the UK for spirits is £28.22 per litre of pure alcohol. There are 3.8 litres in a US gallon, meaning a rate of £107 per gallon of pure alcohol. This gives a UK duty rate of roughly £43 per US gallon for a spirit of 40% alcohol by volume, which would have attracted only $6.44 duty in New York state at any time between 1990 and the end of the study period in 2006. UK duty on a hectolitre of wine of between 5.5% and 15% alcohol by volume is £267. With 26.4 US gallons in a hectolitre, and the New York state wine duty at $0.19 per gallon since 1989, the New York equivalent to that £267 is just $5., whilst not adjusting for inflation, make this clear. A US gallon of 40% alcohol spirit would currently attract £43 in UK duty, compared with only $6.44 in New York state at any time between 1990 and the end of the study period in 2006. A hectolitre of normal strength wine attracts £267 in UK duty, but in New York state any time since 1989 would have attracted just $5. We do not even need to attempt to convert currencies to see that alcohol tax rates are many times greater in the UK.
For more information on current UK duty rates, as well as on plans to make it illegal to sell alcohol for less than the price of duty plus VAT, see this Home Office guidance document.
Last revised 25 February 2014. First uploaded 18 February 2014
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