Premium
NEW ESTIMATES OF THE OPTIMAL TAX ON ALCOHOL
Author(s) -
Kenkel Donald S.
Publication year - 1996
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1996.tb01379.x
Subject(s) - economics , tax rate , alcohol , optimal tax , drunk driving , punishment (psychology) , public economics , microeconomics , monetary economics , medicine , poison control , environmental health , injury prevention , psychology , chemistry , social psychology , biochemistry
In this paper I use a new data set to estimate the optimal alcohol tax rate. As a benchmark, the empirical results imply that the optimal tax rate is over 100 percent of the net‐of‐tax price. However, alcohol taxation is a second‐best solution to the problems associated with alcohol abuse. I conclude that the optimal alcohol tax rate would be much lower if punishment for drunk driving were more certain and severe. Government provision of information about the health consequences of heavy drinking would also remove part of the efficiency rationale for alcohol taxes.