National sin tax on alcoholic beverages and public health

Economics in Healthcare - Policy Memo

Kathleen Sebelius, Health and Human Services (HHS) Secretary

FROM: XYZ, Policy Analyst

Proposal for Imposing a National Sin Tax on Alcoholic Beverages

The proposal for imposing National Sin Tax on alcoholic beverages might be beneficial for our society. It is likely to discourage the excessive use of alcohol which is prevalent in our society. Excessive consumption of alcohol and alcoholic beverages has posed many challenges for policy makers. The over-usage of alcohol does not only affect the user but the effects are generally passed on the society as a whole. Sin taxes on the usage of alcohol might provide increased tax revenues for the government, on one hand while imposing an additional monetary burden on the user on drinkers on the other hand.

Harms from Alcohol Consumption

It is a fact that consumption of alcohol is the major reason for most of the crimes in United States. (Eric 15-16) Alcohol consumption is not only dangerous for the consumer but it also have various economic and social harms for the society as well as users' immediate environment. It means that alcohol can affect not only the drinker but other people in the form of violence or road accidents. Alcohol consumption also plays a vital role in violent crimes e.g. sexual assaults, homicides, child abuse and domestic violence. Thus, we can say that the usage of alcohol can lead to a wide range of personal as well as societal harms.

Approximate Quantifications of Harms from Alcohol Usage

The consumption of alcohol is one of the three major reasons for increased death rate in United States.

Almost 95,000 people died due to over-consumption of alcohol in United Sates in early 2000s.

In United States, approximately 7000 people die under the age of 21 due to excessive usage of alcohol.

In 2006, 1.6 million people were hospitalized in United States.

According to government estimates, the economic costs of alcohol were estimated to be $220 billion in 2010.

According to another government estimate, $686 are spent on every citizen of United States for healthcare (due to excessive usage of alcohol). (Eric 15-16)

How Much Tax?

At this point, it is very difficult to quote any definite percentage of tax to be imposed. Even if the Congress is in favor of the tax proposal, a higher tax percentage is proposed so that the prices of alcoholic beverages do not remain in the reach of general public. (Garrett 21) Currently, in United States, tax on $5 alcoholic beverage bottle is same as that for $50 bottle which should not be the case. Drinkers who have the purchasing power to buy expensive alcoholic beverage are likely to be bound to pay higher amount of taxes (at least 50%) so that they may get discouraged from buying alcoholic beverages.

We can say that sin tax would be an attempt to lowering the consumption of alcoholic beverages among American citizens. It will be better if President Obama supports this tax proposal because it may help United States in implementation of sin taxes on alcohol. It seems to be a very important area of concern for Obama government and requires an immediate decision.