By MICHAEL MOORE of the Missoulian. Posted: Sunday, April 11, 2010 6:00 am
Reporter Michael Moore can be reached at 523-5252 or at mmoore@missoulian.com.
Higher taxes on beer, wine and hard liquor could lower Montana’s high rate of alcohol-related traffic deaths, a new study indicates. “Not surprisingly, traffic fatalities are linked to both alcohol prices and alcohol consumption, and these relationships have been extensively studied,” Montana State University economist Doug Young found in his recently published study. “The weight of the evidence is that higher alcohol prices reduce consumption and fatalities.”
Montana, of course, has little control over alcohol pricing, but it does have some because price reflects tax rates. “A doubling of the state tax on beer would be expected to reduce consumption by 0.5 (percent) to 1.5 percent,” Young wrote. “A doubling of wine and spirits taxes would be expected to reduce consumption of these beverages by 5 (percent) and 9 (percent) to 10 percent, respectively.”
Although Montana’s tax on wine and liquor is a bit higher than the national average, the state tax on beer is about half the national average. And Montanans drink 26 percent more beer per capita than the nation at large. The alcohol tax rates also aren’t tied to inflation and thus have steadily become a smaller and smaller percentage of the overall price of buying alcohol. “Alcohol taxes affect teen drinking and traffic crashes via their effects on beverage prices, which in turn affect alcohol consumption and various forms of alcohol abuse,” Young wrote.
Young’s study came at the behest of Steve Seninger, a University of Montana economist working on a state contract to study binge drinking and its effects on drunken driving and alcohol-related fatalities. “I wanted to see what sort of effect pricing and taxation had on consumption and that is something Doug has done a lot of,” Seninger said. “This is information that gives us another way of potentially addressing the problem.”
Young’s study also comes at a time when an interim committee of the state Legislature is looking at possible anti-DUI bills for the upcoming session. “I’d be interested in having a look at this, and I’m particularly interested if it might provide some sort of funding for some of the changes people are talking about,” said state Sen. Jim Shockley, R-Victor. “If we were to have a DUI court, we have to have a way to pay for it.” Young looked at that point directly. Higher taxes, Young noted, don’t just affect consumption and resulting accident rates; they also provide revenue that can be used for other programs targeted at arresting Montana’s runaway DUI problem.
The state already allocates 23 percent of state beer tax revenue and 65 percent of the liquor tax to the Department of Health and Human Services for treatment of alcohol and chemical dependency and prevention and rehabilitation programs. That said, the tax itself is rarely raised. The beer tax, for instance, hasn’t been raised since 1985 and, adjusted for inflation, its real value has declined 50 percent since then. “There’s certainly a lot more money out there that could be used for programs if they tied the tax to the rate of inflation,” Young said in an interview.
Expressed as a percentage of price, Montana’s beer tax represents 0.8 percent of the price of a six pack. But the tax on a bottle of wine is 6.2 percent of the cost of a bottle, and the liquor tax is 7 percent of the price of a bottle of liquor. Bumping those taxes obviously puts more money in state coffers and could be used to address alcohol-related problems, Young said. But the resulting price increase could also result in fewer alcohol-related fatalities and crashes.
Expressed as a percentage of price, Montana’s beer tax represents 0.8 percent of the price of a six pack. But the tax on a bottle of wine is 6.2 percent of the cost of a bottle, and the liquor tax is 7 percent of the price of a bottle of liquor. Bumping those taxes obviously puts more money in state coffers and could be used to address alcohol-related problems, Young said. But the resulting price increase could also result in fewer alcohol-related fatalities and crashes.
Young noted a study that looked at traffic fatalities from 1982 to 2000. “Young and Bielinska-Kwapisz’s estimates suggest substantial effects of prices on fatalities,” Young wrote. “A 10 percent increase in alcohol prices is predicted to reduce total fatalities by 5.8 percent.” Of Montana’s 229 traffic deaths in 2008, 103 were alcohol-related. The math is simple: A 5.8 reduction means six people would still be alive today. Doubling Montana’s booze taxes might not produce a 10 percent price increase, but the effect would still be measurable in lives, Young found.
“A doubling of state taxes on beer, wine and spirits would be expected to increase overall alcohol prices by 5 (percent) to 6 percent, Young wrote. “The rise in alcohol prices would in turn reduce total fatalities by about 1.45 (percent) to 1.75 percent, and fatalities among teens by about half again as much, 2.25 (percent) to 2.6 percent.” Seninger said Young’s work may prove interesting to the Legislature in its upcoming session. “I wasn’t looking at it that way, but if it has some effect, that would be nice,” he said. “It’s certainly a problem we need to take action on.”
News Channel 13 – KECI Missoula Tammy Harmer (04/11/10)
A coalition against drunk driving says Montana's current DUI problem would cost each state citizen 600 dollars a year if they were taxed individually on it.
The Montana Common Sense Coalition is calling on lawmakers to follow the lead of other states and tax the alcohol industry instead, by imposing a five cent a drink tax. The coalition says Montana is far behind other states who already have a higher alcohol tax. The coalition says it's goal is to bridge a gap between lawmakers and citizens. Tawny Haynes, a member of the coalition and the wife of an State Trooper who was killed by a drunk driver said, "There are a lot of things people want to see. We are trying to portray that and get our legislators to listen to what the people want."
We visited a Missoula pub today to find out what owners think about a possible new alcohol tax in Montana. The local owner says any new kind of alcohol tax will affect the price of drinks, and could slow down consumption a bit. Tami Ursich, owner of Iron Horse said, "So the more you tax, it will affect pricing. It will not affect employees. In my opinion, people are still going to enjoy going out, but it might slow them down. Maybe instead of having three drinks, they might have two drinks, but people are still going to go out and enjoy themselves and be social."
The Common Sense Coalition says drinking and driving in Montana costs our state about 227 million dollars a year. Members say the five cent a drink tax would make about 24 million dollars a year, but would save a lot of money through prevention programs.
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