Overview

Interventions to increase the price for alcohol products through municipal, state, or federal legislation raise the excise tax on these products. Alcohol excise taxes affect the price of alcohol and are intended to reduce alcohol-related harms, raise revenue, or both. Alcohol taxes are implemented at the state and federal level, and are beverage-specific (i.e., they differ for beer, wine, and spirits). These taxes are usually based on the amount of beverage purchased (not on the sales price), so their effects can erode over time due to inflation if they are not adjusted regularly (Guide to Community Preventive Services, 2007).

Recommendations for an ideal tax policy would include taxes to be 33%-50% of total price, or if taxes were based on ethanol content (Nelson et al., 2013). Other strategies include increasing liquor licensing fees for retailers and infraction penalties for violations of alcohol laws and regulations (Hoover, 2005). Evidence generally supports that increasing alcohol taxes can result in net cost savings (SAMHSA, 2016). The Institute of Medicine (2004) recommended the raising of taxes on alcohol to reduce underage consumption and raise revenues for underage drinking prevention as one of their top strategies. Raising the price of alcohol is recommended as evidence-based in the 2016 Surgeon General’s report and Alcohol: No Ordinary Commodity (2010). Another strategy is to raise the price of the liquor license fees.

Hawai‘i’s Alcohol Pricing Policies

Source: the STOP report 2015.

Beer (5% alcohol): Specific excise tax is $0.93/gallon. Note: $0.54/gallon for containers of 7 gallons or more. Wine (12% alcohol): Specific excise tax: is $1.38/gallon. Spirits (40% alcohol): Excise tax is $5.98/gallon. Wholesale pricing restrictions exist for Beer, alcohol, wine, and spirits. The Retailer credit for beer, wine or spirits are restricted—30 days maximum.

Currently, Hawai‘i has not raised liquor license fees in the past 12 years. However, with limited evidence on the effectiveness, it is undetermined as to how much the license fee would have to be raised to make a difference on the price of purchase of alcohol (M. Sparks, personal communication, June 2017).

Discussion of effectiveness

Evidence shows that raising the price of alcohol is effective in reducing excessive alcohol consumption, adolescent drinking, alcohol-impaired driving, and mortality from liver cirrhosis (Elder et al., 2010). Evidence supports a strong efficacy rating that raising the price of alcohol was strongly associated with adults and youth in regards to binge drinking and alcohol-impaired driving (Nelson et al., 2013). Studies reviewed for the Community Guide (2013) provided consistent evidence that increases in alcohol prices and alcohol taxes are associated with decreases in both excessive alcohol consumption and related harms. Although these effects were not restricted to a particular demographic group, there is some evidence that they apply to groups with a high prevalence of excessive alcohol consumption (e.g., young men).

Evidence strongly supports youth are particularly price-sensitive; research on the impact of beer prices indicated reductions in underage and binge drinking in youth (University of Wisconsin Population Health Institute, 2017). Evidence supports that policies increase the price for distilled spirits shifts consumption to lower-alcohol content beverages, resulting in reduced amount of pure alcohol consumption (Babor et al., 2003).

Furthermore, setting a minimum price of alcohol is another effective way to reduce consumption. Evidence suggests that price increases for alcopops result in less consumption of alcopops by young drinkers from a few studies in other countries (Babor et al., 2010; Chikritzhs et al., 2009).

Causal Domain

Economic availability
Retail availability
Social availability
Promotion & media
Enforcement
Community norms

Discussion of effectiveness

Not effective
Varied evidence of effectiveness
Effective

No evidence found
Grey literature
Single published study
Numerous published studies
Systematic review, meta-analysis
Cochrane Review, Community Guide, NREPP

Implementation in Hawai‘i