|Amid Fight Over Teen Drinking, Panel Weighs New Alcohol Tax|
|Subject||Excise Tax and Reduction in Consumption|
|Topic||Market Failure, Regulation, and Public Choice|
|Key Words||Excise tax, advertising, lobbying, consumption, price, revenues, social cost|
A study is due to be released from the National Academy of Sciences that will outline policies designed to reduce underage drinking of alcoholic beverages. The panel reportedly will suggest heavy increases in the excise tax on alcohol and restrictions on the kinds of advertising for these products that can occur. Citing sexually suggestive ads for beer and alcohol, critics note that the industry appears to be marketing specifically to underage crowds.
Lobbyists for the beer industry have opposed such restrictions, favoring instead a push for parents to provide instruction on the dangers of underage drinking. While the industry deplores underage drinking, it notes that the level of consumption has been falling. The Bush administration and a significant portion of congress appear to support the industry in this matter.
Studies have shown that teenage consumption of alcohol is closely tied
to price, in much the same way as teenage consumption of tobacco products
is tied to the price of tobacco. Experts note that high excise taxes on
cigarettes have appeared to curb teenage smoking, and that the same could
occur with underage drinking. Philip Cook, a Duke University economist,
has weighed in on the argument, suggesting that, "current excise
taxes [on alcoholic beverages] are too low, both nationally and in every
state. The rates are far less than the average social cost of each drink
consumed. Raising the excise tax would be in the public interest."
(as quoted in article)
(Updated August 27, 2003)
|Source||John R. Wilke and Christopher Lawton, "Amid Fight Over Teen Drinking, Panel Weighs New Alcohol Tax," The Wall Street Journal. 12 July 2003.|
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