IS ALCOHOL UNDERTAXED?

Almost everyone agrees that smoking is bad for the health. And it is clear that raising tobacco taxes has helped to reduce smoking.

With alcohol, there is no such agreement. For older people, regular moderate drinking has been found to reduce the incidence of heart attacks and strokes. Yet the downside includes drunken driving, crime, violence, loss of income, health problems and premature death.

National statistics put the total annual cost of alcohol abuse (including alcohol-related traffic accidents, crime prevention and lost earnings) at $148 billion. Drug abuse costs $143 billion. There is a war on drugs but not really any war on alcohol.

Unlike tobacco taxes, the real tax rates on alcoholic beverages – adjusted for inflation – have gone down. And, although the alcohol content is the same for a can of beer, a shot of spirits and a glass of wine, taxes vary. A serving of liquor is taxed at twice the tax on beer. A glass of wine is taxed at three times as much as a can of beer. And beer accounts for 55 percent of American alcohol consumption.

A new book, “Paying the Tab: The Costs and Benefits of Alcohol Control,” makes the case for equalizing and increasing the tax on alcoholic beverages as a means of improving public health and safety. The author, Philip J. Cook, a professor of public policy and economics at Duke University, sums up his conclusions in one sentence: “Alcoholic beverages are too cheap for our own good.”

Control of drinking in America has had a long and troubling history. Alexander Hamilton, as the first treasury secretary, pushed through a whisky tax in 1790 as an essential revenue measure. It led to the Whisky Rebellion of 1794 but also helped limit widespread drinking and later helped pay for World War I.

Prohibition, the so called “Noble Experiment,” led to bootlegging and a surge of gangsterism and is generally viewed as a failure, although it did cut back on drinking. When it ended, state laws aimed at control. In Oregon, advertising alcoholic beverages was prohibited, but taverns evaded the law by taping over a neon sign so that it said “BEEP” instead of “BEER.” Another sign said, “We can sell it but we can’t spell it.”

Professor Cook includes masses of statistics and analysis on such matters as consumption of alcohol by various groups and “elasticity” of prices related to taxes. He praises such organizations as Alcoholics Anonymous and MADD (Mothers Against Drunk Driving) but concludes that higher taxes on drinking would be an effective additional control mechanism.

Throughout, he balances individual freedom against the public good. He winds up with a plea, not to bring back Prohibition, but to raise taxes to “ease the struggle to limit abuse, enhance the public health and safety and ultimately increase our collective standard of living.”

With calls for higher cigarette taxes, it is something to think about.