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Sin tax on booze in Alaska not working to quell thirst

alcohol In 2002, those who fought most vigorously to increase alcohol taxes in Alaska said that if consumers paid more, they’d drink less.

Not so. The ADN’s Kyle Hopkins reports that since the 2002 increase passed the Legislature, “sales of whiskey, vodka and other spirits have grown 41 percent.”

Hopkins writes that the tax on beer increased from 35 cents a gallon to $1.07. The wine tax increased from 85 cents a gallon to $2.50 and the tax on hard liquor from $5.60 to $12.80 a gallon.

All that translates to about 10 cents a drink. Whoever thought that spending 10 cents more on a drink is going to curtail behavior hasn’t spent much time with those who like their wine or need their Monarch Vodka. Many economists believe that so-called sin taxes can work to change behavior, but most believe that the tax has to be large to really be felt, like taxes on cigarettes.

Perhaps most galling is that despite the promise that half the money it received from the tax would go to combating substance abuse, programs took a huge dive.

When oil prices went up, however, money began to flow freely. By 2010, the state spending was up to about $40 million on alcohol abuse and treatment. In that year, the state received $39 million in alcohol taxes.

Contact Amanda Coyne at amandamcoyne@yahoo.com