Alcohol and Public Policy Beyond the Shadow of Prohibition (1981) / Chapter Skim
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4. Regulating the Supply of Alcohol Beverages
4. Regulating the Supply of Alcohol Beverages
Pages 61-78
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From page 61... ...
A disparate set of objectives has motivated this historical regulatory effort, the relative importance of these objectives varying with shifts in public attitudes. The current regulatory structure reflects a paramount concern with maintaining an "orderly" commercial trade in alcoholic beverages and maintaining tax revenues.
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From page 62... ...
We then provide an overview of the current federal, state, and local regulatory structure. Subsequent sections discuss taxation, the myriad of regulations governing retail outlets, and minimum drinking age restrictions.
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From page 63... ...
The repeal advocates of the 1930s did not take this position. Fosdick and Scott report that the opinion leaders they talked to were very concerned with promoting temperate drinking practices through supply regulation.
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From page 64... ...
In addition to this general regulatory role, the federal government has direct control over the supply of alcoholic beverages on military reservations, a jurisdiction that is bigger than most states (8 million people are currently eligible to buy at outlets on military reservations) as well as direct control over national parks and waterways, rail, and air carriers.
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From page 65... ...
This agency, called the Alcoholic Beverage Control Board in most states, promulgates detailed rules to implement the state's ABC laws and sets policy on the density, location, and nature of outlets through its licensing activities. These agencies also license outlets that sell alcoholic beverages for on-premise consumption, and the counterpart agencies in monopoly states have this responsibility as well.
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From page 66... ...
The indirect evidence in support of the influence of market forces on the prevalence of heavy drinking rests on an analysis of the distribution of alcohol consumption. If a group of alcoholics exists whose drinking habits are not sensitive to alcohol-related features of their socioeconomic environment, then we would expect the amount of alcohol consumed by the top 5 or 10 percent of drinkers to have little relationship to the drinking habits of the remainder of the population.
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From page 67... ...
the prevalence of heavy drinking; this claim is entirely responsible, given the arithmetic importance of heavy drinkers in determining the mean consumption level. But the results suggest a stronger conclusion, i.e., a close link between the median consumer's drinking level and the consumption level of the consumer at the 90th or 95th percentile of the distribution.
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From page 68... ...
Alcohol tax revenues were a major source of income for the federal government until Prohibition; these revenues constituted 80 percent of all federal internal tax collections in 1907 and about 10 percent at the beginning of World War II. Currently the federal tax on alcoholic beverages has a large effect on alcohol beverage prices but figures very lightly (less than 1 percent)
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From page 69... ...
. A number of econometric studies provide estimates of price and income elasticities for each of the three beverage types, for both the United States and other countries.
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From page 70... ...
Cook examined changes in liquor taxes among 30 license states between 1961 and 1975, in order to ascertain whether liquor tax increases led to statistically discernible changes not only in the indicator of liquor consumption, but also in two alcohol problem indicators: highway crash fatalities and deaths due to cirrhosis of the liver. There were 39 cases of tax increases, ranging from $.25 to $1.75 per proof gallon, during this lS-year period.
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From page 71... ...
We conclude that alcohol consumption and the problems caused by it respond to the price of alcoholic beverages, and we infer that the large reductions in the real cost of alcohol to consumers in recent years are likely to have exacerbated drinking problems. The downward trend in alcohol prices could be reversed by indexing federal excise taxes to inflation or by making the tax proportional to wholesale price rather than volume.
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From page 72... ...
These results cast doubt on such grounds for tax discrimination among beverage types as the assertion that liquor is intrinsically more dangerous than beer. A more appropriate tax strategy might be to tax alcoholic beverages not on the basis of beverage type, but according to ethanol content or whatever other characteristics might be shown to create problems.3 A different type of concern generally taken into account in evaluating tax strategies is the relative distribution (incidence)
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From page 73... ...
For example, the income tax code subsidizes consumption by allowing tax deductions for alcoholic beverages purchased in connection with business-related meals (Mosher 19804. A second example are the armed services, which sell alcoholic beverages at greatly discounted prices at post exchange stores and at clubs on base.
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From page 74... ...
A recent quasi-experimental study of retail sales in a rural area of Ontario compared sales to residents of two cities located some miles apart, both of which were serviced by a package store located in one of them. Per-capita sales were about equal for these cities, despite the differences in accessibility (Popham et al.
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From page 75... ...
Most states with dram shop acts and all states recognizing dram shop liability under common law have as a matter of social policy established that commercial servers of alcoholic beverages have a broad obligation to protect the public from injuries caused by their intoxicated or underaged patrons. The legal standard for assigning negligence (in cases that do not involve underage patrons)
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From page 76... ...
MINIMUM AGE RESTRICTIONS While only a small fraction of the United States continues to prohibit the sale of alcoholic beverages, the prohibition of sales to one large segment of the population youths is currently mandated by every state. The age thresholds all lie between 18 and 21.
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From page 77... ...
found that in 25 states in which the drinking age was lowered, beer was the only beverage type showing a discernible increase in consumption. Douglass refined this result in his analysis of the Michigan experience, concluding that only draught beer consumption increased significantly as a result of the minimum age reduction in that state.
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From page 78... ...
There is good evidence from econometric studies that alcohol pnces, as affected by excise taxation, can affect consumption levels, and probably the consequent rates of alcohol- related problems. Reductions in the minimum drinking age slightly but consistently increase auto accident involvement by younger drivers.
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