Transcript Alcohol Taxes:

Alcohol Taxes:
A Fiscal Policy Solution
To A Public Health Problem
Carla Burkhead
Jenny Murray
Danielle Nelson
PADM 628 - Spring 2015
The Goal is a Healthy Community
The Current Problem with Alcohol Abuse
The Population
● Homeless
● Binge Drinkers
● Heavy Drinkers
Economic Costs
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Emergency Services
Public Safety
Health Care
Traffic Crashes
Social Services
Lost Productivity
The Costs of Alcohol Abuse
● U.S. - $223 billion annually
● Alaska - $1.2 billion annually
● Municipality of Anchorage
○ Homeless Population - $3.1 millon annually
○ Binge & Heavy Drinkers - ??? (could be as high as
$480 million)
There is a need for validated data on the total costs of
binge & heavy drinkers to the Municipality.
The State Alcohol Tax
● A life saving solution
● Generates $20 million per year in revenue
● $.10 per serving; known as “dime a drink”
The State Alcohol Tax is a Solution
that Doesn’t Hurt Business
Pass Through Rates
Price Elasticity
● The amount of the tax that is
transferred to the consumer
● The effect of price on
consumption
● Pass through rates after the
2002 tax was implemented:
o Beer - 208%
o Wine - 284%
Businesses passed through the
full tax rate, plus an additional
price hike
● Alaskans did not decrease their
alcohol consumption after the
2002 tax was implemented
● We are the exception to the rule
Alaskan Cities & Boroughs with Alcohol Taxes
City and/or Borough
Tax
City and Borough of Juneau
3%
$925,000
City of Barrow
3%
37,000
City of St. Mary’s
3%
1,600
5%
1,049,000
City of Fairbanks
5%
2,131,000
City of North Pole
5%
216,00
City of Unalakleet
5%
4,300
City of Kotzebue
6%
178,000
City of Craig
6%
120,000
City of Dillingham
10%
347,000
Fairbanks North Star Borough
2014 Revenue (rounded)
A Municipality of Anchorage Alcohol Tax
Anchorage Alcohol Tax Rate Alternatives with Revenue Projections
Tax %
Low Estimate
High Estimate
3%
$5.5 million
$7.8 million
5%
9.2 million
13 million
10%
18.3 million
26 million
Financial Analysis
Shortages
State of Alaska
City of Anchorage
$ -1,179 million
$ -3.1 million
Percent rate of change of
shortages is 5.1% annually
Financial Analysis
Cost of problem
City = $3.1 million
homeless only, could be up to $480 million
Cost effectiveness ratios
3% tax = 5.5
5% tax = 9.2
10% tax =18.3
...a good tax is one that will generate enough
revenue to adequately cover costs.
Conclusions
● The health of a community is essential to its overall long
term sustainability
● Alcohol taxes are a way to offset the costs of alcohol abuse
and fund alcohol abuse treatment programs.
● The population that drives alcohol related abuse costs is not
only the homeless, but also the binge and heavy drinkers
Recommendations for Anchorage
● Implement a 3% municipal sales tax on alcohol
● Use the revenue from that tax to:
1. Offset the costs of homeless alcohol abusers
1. Fund a task force to investigate the total costs to the
Municipality associated with alcohol abuse (to
include binge, heavy, social and underage drinkers)
Thank you.
Any questions?