Beer Marketer's Insights

Beer Marketer's Insights

"Alcohol Policies in the United States: Highlights from the 50 States," prepared by the University of Minnesota

While alcohol beverage industry executives prepare to ask the current Congress to roll back excise taxes on their products, public health groups continue to push for tax increases. Predictably, increasing alcohol beverage taxes was one of the recommended remedies to help offset the financial burden that "substance abuse" problems put on state budgets in a recent report from National Center on Addiction and Substance Abuse (CASA). CASA estimates states spent a staggering $81.3 billion in 1998 "to shovel up the wreckage of substance abuse." That was 13% of all state spending in 98, according to CASA, about the same as what states spent for higher education, but more than for Medicaid or transportation. Joseph A. Califano, Jr, CASA president, called the results "a clarion call for a revolution in the way governors and state legislators think about and confront substance abuse and addiction." Governors must decide, he said, "to continue to tax their constituents for funds to shovel up the wreckage of alcohol, drug and nicotine abuse and addiction or recast their priorities to focus on preventing and treating such abuse and addiction." CASA further recommends "expansion of use of state powers or legislation, regulation and taxation to reduce the impact of substance abuse."

Calling for an increase on alcohol and tobacco taxes, CASA noted: "increases in price for alcohol and tobacco lead to decreases in the amount people, especially youth consume." Typically, CASA neglected to point out that youth drinking rates have fallen sharply in the face of consistently declining real prices paid for alcohol beverages over the last 20 years. Nor does CASA separate costs of alcohol problems from those imposed by tobacco or illicit drugs.

The figures estimated by CASA provide shock value to help make the case for higher taxes and stricter regulation of alcohol and tobacco more plausible. What may never be clear is what these costs actually are. CASA claimed it used the "most conservative assumptions" to determine costs from 16 different areas of state spending. But rather than just reviewing actual costs, CASA also applied its own estimates to the overall budget figures supplied by states. That inflates the costs substantially. Perhaps most outrageously, CASA estimated that substance abuse costs state criminal justice systems $30.7 bil (77% of all justice spending!). Explaining its methods, CASA acknowledges, "we were less concerned with whether substance abuse caused the spending than with whether intervention will reduce the cost of the burden associated with the problem." So that $30.7 bil figure includes costs not only for inmates who committed crimes as a direct result of substance abuse, but for all prisoners, regardless of their offense, who may have had a substance abuse problem or alcohol-related charge at any time. Here is the CASA breakdown of state costs to combat substance abuse: $16.5 bil in education costs (10% of all state education spending); $15.2 bil in health costs (25% of all health spending); $7.7 bil in child and family assistance (32% of all child/family assistance spending); $5.2 bil in mental health and developmental disabilities (31% of all mental health spending) and $1.5 bil in public safety (26% of all public safety spending). The high percentages alone are enough to challenge the accuracy of CASA's calculations. Writing in AB

A new survey of 5,400 students at 18 colleges suggests that just as students misjudge how much alcohol their peers regularly consume, they also significantly misjudge how much their peers support "policies to restrict alcohol use," according to the Education Development Center which performed the study for the federal government. Look at the results. Nearly 60% of students supported a campus keg ban; only 26% believed their peers supported a ban. Over half of the students supported restrictions of ads that promote drinking at on-campus parties, and "undercover operations" where alcohol beverages are sold; only 20-25% thought their peers supported such measures. Over 40% supported a policy that would make all campus residences alcohol-free; less than 20% thought their fellow students supported that. (One wonders whether these students know how ineffective such alcohol-free policies have been in preventing consumption, as INSIGHTS reported in February.) Finally, 3/4 and 2/3 of the students supported stricter penalties for students who violate campus alcohol policies and for using false ID respectively; but 46% thought other students supported the former, 31% thought other students supported the latter. In fact, HEC reported: "the number of students who support each of 12 policies to restrict alcohol use was an average of 125% higher than the number of students who perceive their peers would support such policies." These findings indicate an "underlying

Not content to battle the American Beverage Institute (ABI) in state legislatures and the media over appropriate drunk driving policy, Mothers Against Drunk Driving's (MADD) national president Millie Webb recently wrote ABI members "to ask that you do your part in the fight against drinking and driving by canceling your ABI membership." ABI primarily represents the interests of on-premise chain retailers. It has been the most active and vocal opponent of laws that lower BAC levels from 0.1 to .08. ABI director Rick Berman has also criticized some alcohol beverage supplier messages--primarily the simple admonition 'don't drink and drive'--- for playing into the hands of MADD and other public health advocates who ABI believes want "zero tolerance." That could, in effect, ultimately put ABI's members out of the drinks business. In addition to retailers, a handful of alcohol beverage suppliers and associations also provide financial support to ABI. At least one of those suppliers, Diageo, pulled its support from ABI after a November 2000 article in the Philadelphia Inquirer quoted an ABI spokesman saying that "my job is to defend drinking and driving." (The article also included ABI

Here’s yet another way to measure the impressive progress reducing drunk driving over the last 2 decades. While the number of highway crash deaths in the US that involved a driver or non-occupant who had a BAC of 0.1 or higher dropped by over 8,000, 39.5% from 1982-1999, the number of traffic deaths that did not involve any alcohol rose sharply. In fact, that number increased by over 7,000 deaths, 37.5% from 1982 to 1999. The chart below shows that drunk driving deaths declined in every single state in the US during this period (there was an increase of 1 death in DC) and declined significantly in the vast majority of states. In 11 states, the number of drunk driving deaths declined by 50% or more during this period: CT, DE, MA, RI, NJ, NY, MD, OK, CO, CA and HI. At the same time, highway deaths that involved no alcohol increased in virtually every state. In only 4 states--MA, NJ, AK, and HI--the number of fatalities in accidents with no alcohol declined. There were very substantial increases—50% or more—in the number of these "no-alcohol" deaths in 12 states. (Please note: for the purposes of this article we focused on "drunk driving deaths," which involved BACs of 0.1 or higher. They do not include all "alcohol-related deaths," where there was any detectable alcohol; in fact, the "alcohol-related trends" are similar to the "drunk driving" trends we report.)

Look at a few other long-term comparisons. Since 1982, the number of drunk driving deaths

in the US declined in every year except 1986,

1988 and 1995. In contrast, the number of driving fatalities that did not involve alcohol increased every year except 1990-93 and 1998. In 1982, 57% of all highway fatalities involved some amount of alcohol, 46% involved drunk drivers or non-occupants. By 1999, those figures had fallen to 38% and 30% respectively. (Less than 1/4 of fatalities involved a BAC of over 0.1 in AR, GA, IA, MD, NY and UT.)

Because of the progress made reducing drunk driving, the percentage of fatalities in crashes with no-alcohol has now reached almost 2/3, up from 43% in 1982. Finally, if you look at drunk driving trends on a per-licensed driver, per-vehicle or per-mile driven basis, instead of looking at the raw numbers, the declines are well over 50% during this period compared to little or no progress in reducing non-alcohol-involved

Note: the chart below shows by state and region the change in the number of fatalities in crashes where no alcohol was involved from 1982 to 1999 (column 1) and the change in the number of fatalities in crashes where there was a BAC of 0.1 or higher (column 3). Columns 2 and 4 show the percent change in those numbers from 1982 to 1999.

Trends in Highway Fatalities 1999 vs 1982

   

No Alcohol

High Alc-BAC 0.1+

Chg#

Chg%

Chg#

Chg%

NE

24

3.6

-460

-54.6

CT

4

2.5

185

64.7

ME

38

45.2

-13

-20.3

MA

-55

20.7

174

-55.4

NH

3

4.2

-39

-48.1

RI

16

44.4

-26

-53.1

VT

18

47.4

-23

-47.9

MA

218

9.2

1,114

-53.8

NJ

-31

-6.6

-238

-53.0

 NY

61

5.3

-525

-67.6

PA

188

24.9

-351

-41.5

SA

2,143

57.4

-1,067

-30.4

DE

18

42.9

-36

-51.4

DC

5

35.7

1

6.7

FL

457

32.2

-154

-15.7

GA

493

96.9

-207

-36.0

MD

119

40.8

-151

-52.4

NC

449

86.3

-233

-36.1

SC

432

144.0

-78

-21.6

VA

141

33.9

-132

-34.9

WV

29

13.1

-77

-39.3

ESC

1,135

77.4

-337

-21.0

AL

336

90.3

-26

-6.9

KY

154

40.6

-115

-33.4

MS

246

77.1

-32

-9.6

TN

399

100.5

-164

-30.0

ENC

999

36.5

-1,144

-38.2

IL

136

19.9

-262

-34.2

IN

176

35.6

-110

-29.3

MI

273

48.6

-251

-36.2

OH

273

39.1

-369

-49.3

WI

141

47.8

-152

-37.3

WNC

595

40.2

-299

-24.2

IA

75

29.4

-60

-33.5

KS

77

28.1

-40

-21.9

MN

164

63.1

-103

-38.9

MO

209

47.1

-25

-7.1

NE

34

25.0

-14

-13.9

ND

10

18.9

-35

-43.8

SD

26

44.1

-22

-28.2

WSC

691

27.7

-1,530

-43.3

AR

200

93.5

-130

-48.1

LA

1

0.2 -131

-28.7

 

OK

31

6.7

-275

-58.4

TX

459

34.6

-994

-42.6

MTN

796

57.9

-492

-31.9

AZ

301

95.0

-6

-1.8

CO

154

61.1

-171

-50.0

ID

33

23.1

-11

-12.6

MT

30

34.5

-48

-35.6

NV

101

108.6

-47

-30.9

NM

44

21.0

-131

-43.7

UT

104

57.1

-39

-41.1

WY

29

32.2

-39

-41.1

PAC

441

17.8

-1,593

-52.6

AK

-12

-25.0

-22

-40.7

CA

314

16.6

-1,214

-54.6

HI

-8

-12.7

-51

-62.2

OR

51

26.4

-129

-47.8

WA

96

35.2

-177

-44.0

US

7,042

37.5

-8,036

-39.5

fatalities on those bases. The policy implication is clear: current and future prevention efforts might be more wisely targeted at broad traffic safety measures--like seat belts, safer roads, safer vehicles-- than at specific alcohol measures like lowering BAC levels. Then again, that’s what some members of the alcohol beverage industry have been advocating for years. Ref 1

The notion that alcohol beverages and tobacco are "gateways" through which young people inevitably move on to marijuana and more dangerous narcotics has taken firm hold in the US among many control advocates, policymakers and the media. Over the last two decades, the gateway theory has helped to fuel zero-tolerance prevention efforts, near-paranoia about marketing allegedly aimed at youth and hand-wringing over the "binge-drinking epidemic." But a close look at actual initiation rates of tobacco/alcohol and drug use in the last century "identifies a way in which the gateway phenomenon appears to be unreliable," according to a pair of statisticians from the National Development and Research Institutes in a recent issue of the American Journal of Public Health. Basically, they found that "the probabilities of progression between stages have shifted dramatically across birth cohorts." That means alcohol/tobacco may have acted as gateways for some generations, but certainly not for all, and that policies based on such a simplistic theory are therefore flawed.

Before the 60s, very few who smoked or drank ever took up marijuana, much less hard drugs. "The gateway phenomenon emerged in the 1960s," the authors noted, when a larger number of young people took up alcohol/tobacco, then moved on to marijuana and other drugs. "However" the authors found, "persons born since the early 1960s, who came of age in the 1980s, were substantially less likely to progress to marijuana, cocaine powder, crack and heroin use." (They did not look at use of inhalants, amphetamines or hallucinogens. That

The experience of 7,770 Canadian women "suggests that the link between alcohol and violence may indeed be a spurious one in which masculinity is acted out through both heavy drinking and attacks and degradation of female partners," concluded the authors of a recent study. While heavy drinking by these women's spouses had appeared to predict violence, when the men's attitudes about violence or control over wives were "factored out, the effect of alcohol abuse became non-significant." This conclusion was similar to the one we reported in December INSIGHTS that even heavy drinking turned out to be a "poor predictor of intimate partner violence overall" when race, gender and other factors were considered. The conclusion is also supported by other studies cited by the authors of this Canadian research that challenge the widely-held belief that drinking is a causal or genuinely significant factor in leading people to act violently.

In the Canadian study, heavy drinking appeared to predict violence at first. Only 2% of the husbands who were abstainers acted violently toward their wives, compared to 11% among men who were frequent heavy drinkers. Several socio-economic factors, education and employment, and "attitudes supportive of male dominance over women" were also "important predictors of violence," but "attitudes have the strongest predictive power," the authors concluded. In fact, while a husband's heavy drinking appeared to increase the risk of violence by 2.4 times in the authors' model, women who said their husbands engaged in a lot of name-calling and put downs, were jealous and kept them from other men, limited their contact with other people and/or prevented the wife from access to income were 5 to 14 times more likely to experience violence than women whose husbands did not have those attitudes. When socio-demographic variables are analyzed together with the husbands

While many colleges and even fraternities are adopting "alcohol-free" residences for students, they should take a close look at a recent evaluation of such policies that raises serious questions about how effective they are in reducing student consumption and/or alcohol problems. Indeed, this survey of 2,555 students on 52 campuses found that students who lived in "alcohol-free" housing actually said they drank more often and more heavily than those who lived in "unrestricted housing." What

This new analysis shows once again that alcohol beverage control policies are based on scientifically shaky ground, if any ground at all. Two European researchers recently took a fresh look at the mathematical theories and assumptions that have driven alcohol control policy efforts for decades. Those theories, put forward by S. Ledermann and OJ Skog in 1964 and 1980 respectively, basically postulated that in any given population, trends in average alcohol beverage consumption are directly linked to trends in heavy and abusive drinking in the same population. Policy advocates have long embraced these theories to support control measures to reduce average consumption rather than focus on problem drinking or problem drinkers. Hence the control advocates support higher taxes, restrictions on sales, advertising and marketing, reducing the number of alcohol beverage sales outlets, etc. But this fresh look at Ledermann/Skog found "there is little empirical evidence, especially recent evidence, to support Skog's key assumptions," which drive control policy. Test after test of Skog's assumptions and predictions were "inconclusive," according to the authors. They even cited one study that found "the percentage of heavy drinkers often did not decrease with decreasing mean consumption, but rather, increased." That's the exact opposite of what control advocates would claim.

The authors understand the importance of their findings, noting that Skog's theory has been "very influential

Since the Bush administration’s top priority is cutting taxes, US brewers believe their chances to roll back the 1991 federal excise take hike (the beer tax doubled from $9/bbl to $18/bbl under Bush’s father) are the best they’ve ever been. "We believe that because most of the other taxes that were raised in the 1990 budget summit have been repealed, as a matter of fairness the beer tax should be rolled back. We intend to pursue that very aggressively," Beer Institute president Jeff Becker told INSIGHTS. A rollback of the beer tax would not be vulnerable to the criticism that it principally benefits the rich. Indeed, the brewers can legitimately argue that this is a tax break that will particularly benefit the middle-class, which may even attract more Democratic votes than some other tax cut proposals.

What about liquor and wine? "The Wine Institute plans to pursue a rollback to the 1990 tax level," of 17 cents/gallon compared to the current $1.07/gallon, senior vice-president Bobby Koch told INSIGHTS. "We will be just as energetic in pursuing a rollback, if not more so, than the beer industry," he added. Koch also suggested the possibility of an industry-wide attempt to roll back beer, wine and spirits taxes, a unique opportunity to forge some rarely-achieved alcohol beverage industry unity. Mark Gorman, senior vice-president of government affairs at DISCUS, said the distillers are of the same mind: "We are extremely interested in the prospect of excise tax reform. We have talked to a lot of members of Congress about it and are

analyzing rollbacks to various levels." (The

 

 

 

spirits tax increased from $12.50 per proof gallon

to $13.50 in 91. Distillers were hit with a larger $2-per-proof-gallon increase in 1986.) "We are looking at different ways and the right opportunity to move excise tax legislation along."

While the alcohol beverage suppliers plan to pursue tax cuts, you have to keep in mind they’re not alone. The Wall Street Journal noted in a recent front-page article: "Bush Tax Cuts Send Corporate Lobbyists Into a Feeding Frenzy." In other words, the line is long when it comes to corporations seeking tax relief in 2001. One possibility: all or most non-income tax issues will be held off for a second tax bill after income tax issues are resolved. Based on 1999 volume, rolling back beer, wine and spirits taxes to their 1990 levels would have cost the government approximately $1.8 bil, $495 mil, and $273 mil respectively that year.

Meanwhile, "more tax threats are likely this year" at the state level because for the first time in several years "there is not enough money to go around," AB vice-president of state affairs Mark Boranyak wrote in a recent AB publication. "The question faced by many general assemblies will be whether to raise taxes, cut services or some combination of the two." He pointed to several states with "serious budget dilemmas": Iowa, Kansas, Louisiana, and

Tennessee. Some extreme proposals are already being advanced in several states. For example, the governor of Vermont advocated a penny-a-can beer tax to pay for a $3 million anti-heroin program. In Minnesota, a state senator pushed for a nickel-a-drink tax to help pay for costs

associated with alcohol abuse. And in Louisiana, a state senator is looking for an alcohol tax

 

increase to help fund a pay raise for teachers. Note that these proposals for large tax hikes all are "earmarked," designed to help pay for other state programs. While the Minneapolis Star Tribune rated passage of the Minnesota proposal as unlikely, it is too early to tell what will happen in other states. But it does look like a period of increased state excise tax battles has already begun.

 

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