Calculating the Effects of Tax Changes on Consumption and Revenue

Tax Index

Find out how much your state will gain in revenue due to alcohol excise tax increases!


CSPI has developed this alcohol tax calculator to assist public health advocates, political activists, legislators and legislative staff, state and local officials, and journalists in estimating how increasing state alcohol excise tax rates will affect state revenue and alcohol consumption.


License states, in which alcohol is sold by private retailers, impose alcohol excise taxes at the wholesale level.  However, in control states, where state-controlled stores sell alcohol, a percentage markup is added onto the wholesale price of alcohol.  This tax calculator considers only the situation in license states.  See if your state is a control state or a license state.


The calculation we propose assumes that any tax increase would be marked up at least 7.5%.  In fact, prices might go even higher.  Other factors that might affect the outcome, which are not considered in this analysis, include the short and long-term effects of the tax increase over time, and general trends in alcohol consumption.  We also made certain assumptions about the price of alcoholic beverages – based on national data – and you may wish to localize that information.  You will need some information to complete the calculations.  The results will provide a preliminary estimate only.  We encourage you to consult with your state's Alcoholic Beverage Control agency, Department of Revenue, or legislative finance committees.


Equation on which this calculator is based

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Leung, S.-F. & Phelps, C.E. (1993).  "My kingdom for a drink…? A review of estimates of the price sensitivity of demand for alcoholic beverages."  In: Hilton, M.E., and Bloss, G., eds. Economics and the Prevention of Alcohol-Related Problems: Proceedings of a Workshop on Economic and Socioeconomic Issues in the Prevention of Alcohol-Related Problems, October 10-11, 1991, Bethesda, MD. NIAAA Research Monograph No. 25. Rockville, MD: NIAAA, pp. 1-31.


Nelson, J.P. (1997).  "Economic and demographic factors in U.S. alcohol demand: A grown-accounting analysis."  Empirical Economics.  22(1):83-102.


Young, D.J. & Bielinska-Kwapisz, A. (2002).  "Alcohol Taxes and Beverage Prices." National Tax Journal.   LV(1):57-74.




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