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Saturday, June 3, 2023
June 3, 2023

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People drink less when cigarettes cost hiked

The Columbian

Excessive drinking leads to about 88,000 deaths each year in the United States. Cigarette smoking adds another 440,000 deaths to the tally, most due to long-term health problems such as cancer. A new study from the Washington University School of Medicine suggests you could take a bite out of both figures with one simple policy change.

There’s already a substantial body of research showing that cigarette tax increases lead to decreased cigarette consumption. A recent Congressional Budget Office study concluded that a 10 percent increase in cigarette prices leads to a 5 to 15 percent decrease in teen smoking rates, and a 3 to 7 percent decrease among all adults.

The Washington University study finds that the same 10 percent cigarette price increase also leads to a 1 percent decrease in alcohol consumption. But the researchers found that when it comes to tax policy, all drinks aren’t created equal: “Strengthening of tobacco policies was associated with reductions in beer and spirits consumption, but not wine. This suggests that smoking and drinking beer are more strongly related than smoking and drinking wine.”

Why no effect on wine? The authors note that “people who prefer wine are less likely to smoke, more educated, and more likely to have healthier lifestyle habits than those who prefer other types of alcohol.” Since wine drinkers aren’t smoking as much as beer drinkers to begin with, it make sense that a change in cigarette prices would have less of an effect on wine consumption.

Liquor taxes low

In his book “Paying the Tab,” Duke University’s Philip J. Cook shows that in real terms, federal beer, wine and liquor taxes are approaching historic lows — on average, if a typical drink in this country costs about a dollar, federal tax accounts for 10 cents of that. Mark Kleiman argues that tripling that tax would add about $14 billion a year to federal revenues, and save about 3,000 lives per year due to decreased consumption — all for the relatively low price of 20 cents per drink

But higher alcohol taxes have been a tough sell historically. The alcoholic beverage industry has fiercely opposed tax increases. Cook notes that in 2005, a majority of the House signed on to a bill that would have cut beer taxes by half. However, it wasn’t voted on and never made it out of the House.

Tobacco taxes, on the other hand, have been a much easier sell. Fewer Americans smoke than drink alcohol — there are about half as many monthly smokers as there are drinkers — so tobacco tax hikes face less public opposition.

And at the state level, there’s still a lot of room for increases. State taxes on a pack of cigarettes range from $0.15 in Missouri to $4.35 in New York. Kentucky could tack on an additional nine dollars in taxes, and cigarettes there would still be cheaper than in Manhattan, where a pack will set you back $14.50 these days.

If we accept that tobacco tax hikes also decrease alcohol consumption, as the Washington University study shows, then it stands to reason that states with the lowest cigarette tax rates could decrease their alcohol consumption considerably by putting them on par with states with higher tobacco tax rates.

None of this is to suggest that hiking cigarette taxes is the optimal way to reduce alcohol consumption. If your policy goal is to reduce drinking, then raising alcohol taxes would be the best way to do that. However, the study does provide evidence for a rather nifty side benefit of a tobacco tax hike. Legislators grappling with these issues in the future should take heed.