Alcohol tax cut may not reduce consumer prices, could lead to more deaths

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The Daily Meal

For years, experts have been pleading with lawmakers to raise the tax on alcohol in an effort to reduce alcohol-induced deaths. But instead, they’re planning to lower it - by approximately $4.2 billion. According to CNN Money, Senate Republicans are proposing significant tax cuts for wine, liquor, and beer, including one that that reduces the rate by half for small craft brewers.

“Half the typical price of a bottle now goes to taxes,” Kraig Naasz, president and chief executive of the Distilled Spirits Council, told USA Today. “If you return some of that to producers large and small, those funds will be reinvested in businesses that create jobs and promote U.S. agriculture.”

Brewers, distillers, and vintners (and fans of craft beer) are understandably excited about the prospect, but while low-tax booze may seem like great news - in some ways it’s really not. For one, experts predict that businesses will channel the tax savings into equipment and investments rather than reducing prices for consumers.


There could also be consequences for public health. According to a graph obtained by The Washington Post, in 1979, the number of alcohol-related deaths (excluding homicides and other accidents indirectly related to alcohol) totaled around 800,000. In 2015, that number soared well over 100,000. The access to cheaper alcohol “will lead to more drinking and thus more alcohol-related deaths and violence,” explains Adam Looney, a senior fellow in economic studies with the Brookings Institution.

“Based on economic evidence of the negative externalities imposed by alcohol, the total local, state, and federal tax on alcohol should be roughly four times higher than it is now, and certainly not lower,” he continued. Looney estimates that 3,100 people will die as a result of the tax cuts before the provision expires.

If approved, the tax cuts on alcohol will be in effect from December 31, 2017 until December 31, 2019. For more about food and drink in the legislative world, check out these political food quotes, moments, and blunders.

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