Alcohol Taxes and Health:
The first internal revenue measure ever enacted by the U.S. Congress was a liquor tax, in 1791. For more than 200 years since, Congress and the states have looked to liquor -- as well as beer and wine -- for revenue to support the purposes of government.
Those taxes once contributed a significant portion of federal revenue. In 1941, alcohol taxes provided 11 percent of federal collections. In 1991, they accounted for less than 1 percent and by 1995 even less. Compared to most other developed countries, the alcohol-tax share of total federal and state revenues is paltry.
Although federal alcohol taxes on liquor were increased in 1986 and 1991, and beer and wine taxes were raised in 1991, those were the first increases since 1951. Due to inflation each tax dollar collected today is worth less than 20 percent of its value in 1951. Liquor and beer rates rose to 1989 and 1978 values, respectively. Of course, due to inflation since 1991, the beer, wine, and liquor rates have declined another 12 percent in relative terms.
© CSPI 1996