We have previously commented on the growing popularity of “alcopops” and our concern that their advertised reputation as sweet drinks masking the taste of liquor, while delivering intoxication, makes them appeal to underage drinkers. Alcopops are usually sold in stores’ beer aisles, also making them popular among underage drinkers, who most frequently choose beer as their drink of choice. Large-scale consumption of these drinks by young and underage drinkers fuels the binge-drinking problem in this country, and so we were happy to read that California has recently decided to regulate and tax alcopops as distilled spirits and not as beers. The change, which will take place in October, will tax alcopops with the current liquor tax of $3.30 per gallon, up from $0.20 per gallon, the current tax on beer.
We believe that increasing the tax on alcopops will help decrease their consumption amongst underage drinkers since a higher price tag should decrease their appeal amongst consumers. In fact, past studies have indicated that throughout history, higher taxes on alcohol have led to a decreased likelihood of heavy drinking and binge drinking. Higher alcohol prices have also been correlated with decreased rates of underage drinking, sexually transmitted diseases, and traffic fatalities in the past…nothing wrong with that!
Recent comments on our May 27th, 2008 post argue that using higher taxes to deter alcohol consumption is a neo-prohibitionist approach and that focus should be placed on responsible drinking and not the type of alcohol consumed. However, we believe that alcopops are a unique case and that increasing the tax on these beverages is an appropriate strategy to combat irresponsible drinking. Alcopops appeal to underage and young drinkers, who are most likely to binge drink, and so making them less appealing by raising their price targets irresponsible drinking within this age group. This, coupled with the fact that studies have shown that higher prices deter alcohol abuse, suggests that increasing the tax on alcopops will be effective in reducing irresponsible binge drinking. Of course, we hope that measures to teach responsible drinking, such as education programs on safe alcohol consumption, are adopted along with these adjustments in taxes. With any luck, other states will begin to follow California’s lead and reconsider their tax policies for liquor in the near future.
To read more on the studies mentioned above, see Paying the Tab: The Costs and Benefits of Alcohol Control, by Philip J. Cook—a very interesting read.