POV: Massachusetts Has a Budget Shortfall: Raising Alcohol Taxes Could Help

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POV: Massachusetts Has a Budget Shortfall: Raising Alcohol Taxes Could Help
Increasing the levy would also improve the health and safety of our state
Massachusetts Governor Maura Healey has announced hundreds of millions of dollars in cuts to the Massachusetts state budget because tax revenues are lower than expected. I have an easy answer for how to fill that budget hole: update the state’s alcohol tax.
The last time the commonwealth adjusted its alcohol tax, Jimmy Carter was president and Blondie’s “Call Me” was the number one song. Alcohol taxes are based on the amount of liquid in the beverage, and that does not change from year to year, but the value of a dollar does. Because they have not been modified to account for inflation, Massachusetts alcohol taxes have lost 74 percent of their value since 1980.
This is unfortunate, because alcohol taxes turn out to be a very efficient way of reducing alcohol-related problems. According to the World Health Organization, increasing alcohol taxes is a “best buy”—one of the most effective and cost-effective ways to reduce and prevent alcohol-related problems in a population. In fact, it is the most cost-effective: it costs the least per healthy life-year gained of any of the most effective alcohol interventions.
When the price of alcohol goes up, people—including young people and heavy drinkers—drink less, according to an analysis of 112 studies, including more than 1,000 estimates of the effects of alcohol prices on how much people drink. Also, when taxes and prices for alcohol rise, alcohol-related problems—such as violence, traffic crashes, sexually transmitted diseases, and crimes—go down.
Alcohol tax increases also lead to a net increase in jobs: according to an analysis developed by a research collaborative I coordinated, adjusting the state’s alcohol tax by a dime per drink would create as many as 1,890 new jobs in the commonwealth.
In 2019 (the last year for which an estimate is available), alcohol caused the deaths of 3,101 people in Massachusetts, or slightly more than 1 in 20 deaths. Poisonings, alcoholic liver disease, cancers caused by alcohol use, and liver cirrhosis were the leading causes of death.
Alcohol costs the commonwealth in economic terms, as well. The last available estimate is from 2010, when researchers from the Centers for Disease Control and Prevention (CDC) estimated that alcohol cost Massachusetts $5.6 billion per year in lost productivity, property damage, healthcare, criminal justice, and other costs. Of this, government paid out $2.26 billion.
Another way of looking at this is the annual cost per person. Simple math brings this to roughly $861 per Massachusetts resident, whether they drink or not. In contrast, alcohol tax revenues for the state were roughly $11 per person. Clearly, these tax revenues fall far short of paying for what alcohol costs the state.
People who drink too much, according to the CDC’s definition of excessive drinking, would pay close to three-quarters of any additional alcohol taxes levied by the state. From a health perspective, this is precisely the group we would want to see most affected by a modification of the alcohol tax.
Drinking rises with income, so among those who do not drink too much, wealthier people would pay more per person than those in lower-income brackets.
I was involved in the successful effort to use alcohol taxes in Maryland to pay for alcohol and other drug prevention and treatment, access to healthcare, and services for elders and people with developmental and other disabilities.
One of the roles I played in that effort was estimating how much money a tax would raise. Using those same methods—which allow for the possibility that people will drink a little bit less if the price of a drink goes up a small amount due to a tax adjustment—a modest increase of a dime per drink in the state’s alcohol tax could raise nearly $300 million.
Governor Healey announced $294 million in cuts to MassHealth, the vast majority of whose enrollees have incomes well below the federal poverty level. Using an adjustment to the state’s alcohol tax to fill this shortfall would disproportionately benefit the poorest of our fellow citizens.
There is your solution, Governor Healey. We don’t need to balance the state’s budget by cutting services for our poorest residents. Bringing the state’s alcohol tax up to date would fill that painful hole in the budget, and improve the health and safety of our state at the same time.
David Jernigan is a School of Public Health professor of health law, policy, and management and assistant dean for public health practice. He is an expert on the issue of alcohol advertising, marketing, and promotion and its influence on young people. He can be reached at dhjern@bu.edu.
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