Equal Tax for Equal Alcohol? Beverage Types and Antisocial and Unlawful Behaviours

Abstract

Alcohol taxation is one of the main policy instruments used by governments around the world to correct for market failures and negative externalities that are associated with excessive alcohol consumption. This paper makes an important contribution to the discussion on alcohol policy interventions by providing empirical evidence linking alcohol beverage types to harmful and unlawful drinking behaviours. In particular, we look at two types of risky behaviours when intoxicated: (1) drink driving, and 2) hazardous, disturbing or abusive behaviour (operate a boat/machinery; created a public disturbance/nuisance; caused damage to property; stole money, goods or property; and verbally or physically abused someone); and their association with ten alcoholic beverages. We use individual-level data from a national representative survey and different modelling strategies that allow us to examine various scenarios, including the influence of observed and unobserved individual attributes. Overall, we find regular strength beer, canned Ready-To-Drink (pre-mixed spirits) as the main contributors, and mid strength beer, cask wine and bottled spirits and liqueurs, and bottled wine as the second-order contributors. Of all harmful beverage types, cask wine appears to be significantly under-taxed despite its external costs to the society. We also note the external costs of regular and mid strength beer are as high as those of pre-mixed drinks and yet there is a significant disparity across their tax rates.