Facts About the Michigan Beer Tax by MichaelChoate


									       Raising Michigan’s Beer Tax is the Right Thing to Do

   Since 1966, Michigan has imposed a tax of $6.30 per 31 gallon barrel.1 This equates to
    about 1.9 cents per 12-ounce can or $0.20 per gallon. The national average per gallon is

   As of March 2009, Michigan ranks 28th among the 50 states in its beer tax rate.3

   Alcohol taxes were once intended to keep prices high enough to deter excessive use.
    However these taxes have not kept pace with general inflation, and the real price of beer
    has actually dropped.4 Adjusting for inflation, the Michigan deflated tax rate now equals:

       o .04 cents per gallon, or
       o .0037 cents per 12 oz can.
       o No other product has maintained its 1966 tax rate for the past 42 years.5

   If the 1966 tax had been indexed to inflation, the cost of a 31 gallon barrel would be
    about $39 today raising more than $270 million instead of $42.5 million. A can of beer
    would cost about $.10 more.6

   In 2008 the tax on beer in Michigan generated about $41 million dollars with the
    proceeds going to the general fund. The total amount of revenue collected by the
    Michigan Liquor Control Commission for 2008 was about $333 million.7

   In 2005, underage drinking costs the citizens of Michigan $2.0 billion.8 This means that
    the State of Michigan only collects about 17% of the costs associated with underage
    drinking and none of the costs associated with adult drinking.

   Government data fails to support that increasing taxes will result in loss of jobs.
    According to the Bureau of Labor Statistics of the U.S. Department of Labor, between
    1990 and 2000, beer-industry wholesale trade employment rose by more than 8,000 jobs,
    including increases between 1990 and 1992 (a year before and after the federal tax

   Taxing alcoholic beverages is an effective public health strategy for reducing the burden
    of alcohol-related disease.10

   Raising the price of beer by increasing the tax is one of the most effective ways to reduce
    underage drinking and alcohol-related problems. There is an enormous amount of
    research that documents the effectiveness of this strategy.11
        o Young adults are more responsive to price increases than adults.
        o In a survey of self-reported responses, high school students admit to reducing
           their overall alcohol use because of price increases.
        o Beer prices inversely correlate with youths’ decisions to drink.
             o Frequency and quantity of underage alcohol consumption is inversely related to
               the price of alcohol.
             o The Centers for Disease Control and Prevention found that a beer-tax increase of
               20 cents per six-pack would reduce gonorrhea rates by 8.9 percent and syphilis
               rates by 32.7 percent.
             o Incidents of crime and violence, especially domestic violence, child abuse, and
             o Alcohol-related traffic fatalities and crashes.
             o Increase the probability of attending and graduating from a four-year college or
             o College students are less likely to transition from abstainers to moderate drinkers
               or from moderate to heavy drinkers if alcohol prices are high.
             o Of 18 studies that examined price or tax effects on traffic crashes, 15 found that
               higher alcohol prices or taxes were associated with fewer crashes.12

Raising the beer tax is fair. The costs of underage drinking and irresponsible adult alcohol use
overwhelmingly outweigh the revenues collected to prevent and deal with the social problems

For more information contact: Marie Hansen                    or       Mike Tobias
                              517.487.3319                             517.775.0303

                                    Citizens for Alcohol Policies that Promote Health and Safety.
                                    PO Box 232
                                    Perry, MI 48872
                                    Email: info@michiganalcoholpolicy.org
  Center for Science in the Public Interest (2004). Factbook on State Beer Taxes. Alcohol Policies Project working
  Center for Science in the Public Interest. (2009). States Ranked by Alcohol Tax Rates: Beer. Online:
  Ibid 2.
  Join Together. (n.d.) 10 Drug and Alcohol Policies That Will Save Lives. Online:
  Harper, N. L. (2004). Proposal to Increase State Taxes on Beer
  Center for Michigan. (2007). A New Model Michigan: Eight Ideas to Structurally Change How Michigan Does the
Public’s Business in These Difficult Economic Times
  Michigan Liquor Control Commission (2008). Annual Financial Report 2008. Online:
  Pacific Institute for Research and Evaluation. (2006). Underage Drinking in Michigan: The Facts. Online:
  Center for Science in the Public Interest (2007). Responses to Misleading and Inaccurate Beer Industry
Propaganda on Excise Taxes. Online: http://www.cspinet.org/booze/taxguide/propaganda.pdf
   Wagenaar, A. C. (2008) Effects of Alcohol Tax Increases on Alcohol-Related Disease Mortality in Alaska: Time-
Series Analyses from 1976-2004. American Journal of Public Health. 99(1):1-8.
   Center for Science in the Public Interest (2003). Why Raise Alcohol Excise Taxes to Protect Underage Youth?
Alcohol Policies Project Fact Sheet.
   Ibid 10.

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