Alcohol taxes: do the poor pay more than the rich?
Concern has often been expressed that alcohol taxes bear more heavily on the poor than on the rich, especially if these taxes are based on quantity rather than price. However, surprisingly little is known about how the tax burden is distributed across different income groups. Utilizing survey data from 3010 respondents in New Zealand, this study calculates exactly how much alcohol tax was paid by respondents in different income groups and in different types of households. These results were applied to household expenditure survey data to estimate the incidence of alcohol taxes across different households. The results suggest that, although in dollar terms the wealthiest households paid about four times as much alcohol tax as the poorest households, when expressed as a percentage of income, alcohol taxes are distributed proportionally across the lower income brackets but decline towards the upper end of the income scale. These taxes accounted for less than 1% of household income for all income groups. Households with children generally paid less alcohol tax than households without children. It is concluded that alcohol taxes in New Zealand do not seriously conflict with the broader equity objectives of government policy.
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Ashton
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Casswell
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Gilmore
D000434:Alcoholic Beverages / Q000191:economics*; D002648:Child; D006801:Humans; D009520:New Zealand; D011203:Poverty; D013660:Taxes / Q000331:legislation & jurisprudence*