WEDNESDAY, Jan. 4, 2006 (HealthDay News) -- Boosting taxes to increase the price of alcohol may not reduce drinking and may actually increase drinking in some cases, says a U.S. study in the January issue of Alcoholism: Clinical & Experimental Research.
While many researchers and policy makers believe that increasing the price of alcohol would reduce alcohol sales and related health and social problems, this study says that may, or may not, be true. The authors recommend a minimum price be imposed on alcohol.
The researchers analyzed data on Swedish alcohol prices, sales and consumption from 1984 to 1994.
"In general, the evidence suggests that as you increase taxes, and alcoholic beverages become more expensive, individuals tend to use alcohol less. However, the findings in this paper indicate that the reality is not so simple, because there are alcoholic beverages at different levels of price, and when you implement taxation, what happens is that the individuals who are able to purchase the alcoholic beverages that were more expensive just switch to less expensive ones," Raul Caetano, a professor of epidemiology and regional dean at the University of Texas School of Public Health, said in a prepared statement.
"In fact, the paper shows that there may be situations where the intent of taxation is reversed, in that alcohol consumption increases rather than decreases because the alcohol of choice has become cheaper. Basically, they buy more, and end up drinking more," Caetano said.
"We had four major findings," study first author Paul J. Gruenewald, a senior research scientist at the Prevention Research Center, said in a prepared statement. "One, the distribution of prices for alcohol is very broad. Two, increases in prices of expensive alcohol have little impact on sales. Three, increases in prices of inexpensive alcohol have large impacts on sales. Therefore, four, tax increases can have different impacts on sales, depending on how they are passed on to the consumer."
He said that policy makers need to carefully consider any attempts to use taxation to control alcohol consumption.
Gruenewald cautioned, "Beverage prices can be manipulated by the alcohol industry to their own ends, in order to maximize the consumer base or minimize tax impacts. In fact, ever-cheaper alcoholic beverages are being made available in the market in order to ensure continuous growth in the consumer base. Alcohol taxes may have no effects upon the prices of these beverages and, therefore, little effect on use and problems. Our findings suggest that a simple form of regulation, minimum price posting (that retailers cannot undercut), may be the best form of regulation."
More information
The U.S. Centers for Disease Control and Prevention has more about alcohol consumption.
