Raising Michigan’s Beer Tax is the Right Thing to Do
- Since 1966, Michigan has imposed a tax of $6.30 per 31 gallon barrel.1 This equates to about 1.9 cents per 12-ounce can or $0.20 per gallon. The national average per gallon is $0.282
- As of March 2009, Michigan ranks 28th among the 50 states in its beer tax rate.3
- Alcohol taxes were once intended to keep prices high enough to deter excessive use. However these taxes have not kept pace with general inflation, and the real price of beer has actually dropped.4Adjusting for inflation, the Michigandeflated tax rate now equals:
- .04 cents per gallon, or
- .0037 cents per 12 oz can.
- No other product has maintained its 1966 tax rate for the past 42 years.5
- If the 1966 tax had been indexed to inflation, the cost of a 31 gallon barrel would be about $39 today raising more than $270 million instead of $42.5 million. A can of beer would cost about $.10 more.6
- In 2008 the tax on beer in Michigangeneratedabout $41 million dollars with the proceeds going to the general fund. The total amount of revenue collected by the Michigan Liquor Control Commissionfor 2008 wasabout $333 million.7
- In 2005, underage drinking costs the citizens of Michigan $2.0 billion.8 This means that the State of Michiganonly collects about 17% of the costs associated with underage drinking and none of the costs associated with adult drinking.
- Government data fails to support that increasing taxes will result in loss of jobs. According to the Bureau of Labor Statistics of the U.S. Department of Labor, between 1990 and 2000, beer-industry wholesale trade employment rose by more than 8,000 jobs, including increases between 1990 and 1992 (a year before and after the federal tax increase).9
- Taxing alcoholic beverages is an effective public health strategy for reducing the burden of alcohol-related disease.10
- Raising the price of beer by increasing the tax is one of the most effective ways to reduceunderage drinking and alcohol-related problems. There is an enormous amount of research that documents the effectiveness of this strategy.11
- Young adults are more responsive to price increases than adults.
- In a survey of self-reported responses, high school students admit to reducing their overall alcohol use because of price increases.
- Beer prices inversely correlate with youths’ decisions to drink.
- Frequency and quantity of underage alcohol consumption is inversely related to the price of alcohol.
- The Centers for Disease Control and Prevention found that a beer-tax increase of 20 cents per six-pack would reduce gonorrhea rates by 8.9 percent and syphilis rates by 32.7 percent.
- Incidents of crime and violence, especially domestic violence, child abuse, and rapes
- Alcohol-related traffic fatalities and crashes.
- Increase the probability of attending and graduating from a four-year college or university.
- College students are less likely to transition from abstainers to moderate drinkers or from moderate to heavy drinkers if alcohol prices are high.
- Of 18 studies that examined price or tax effects on traffic crashes, 15 found that higher alcohol prices or taxes were associated with fewer crashes.12
Raising the beer tax is fair. The costs of underage drinking and irresponsible adult alcohol use overwhelmingly outweigh the revenues collected to prevent and deal with the social problems created.
For more information contact: Marie HansenorMike Tobias
517.487.3319517.775.0303
Citizens for Alcohol Policies that Promote Health and Safety.
PO Box 232
Perry, MI 48872
Email:
References
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1Center for Science in the Public Interest (2004). Factbook on State Beer Taxes. Alcohol Policies Project working paper.
2Center for Science in the Public Interest. (2009). States Ranked by Alcohol Tax Rates: Beer. Online:
3Ibid 2.
4Join Together. (n.d.) 10 Drug and Alcohol Policies That Will Save Lives. Online:
5Harper, N. L. (2004). Proposal to IncreaseState Taxes on Beer
6Center for Michigan. (2007). A New Model Michigan: Eight Ideas to Structurally Change How Michigan Does the Public’s Business in These Difficult Economic Times
7Michigan Liquor Control Commission (2008). Annual Financial Report 2008. Online:
8Pacific Institute for Research and Evaluation. (2006). Underage Drinking in Michigan: The Facts. Online:
9Center for Science in the Public Interest (2007). Responses to Misleading and Inaccurate Beer Industry Propaganda on Excise Taxes. Online:
10Wagenaar, A. C. (2008) Effects of Alcohol Tax Increases on Alcohol-Related Disease Mortality in Alaska: Time-Series Analyses from 1976-2004. American Journal of Public Health. 99(1):1-8.
11Center for Science in the Public Interest (2003). Why Raise Alcohol Excise Taxes to Protect Underage Youth? Alcohol Policies Project Fact Sheet.
12Ibid10.