THE ECONOMIC ARGUMENT FOR AND AGAINST THE USE OF TAXATION TO REDUCE THE USE OF ALCOHOL
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ARGUMENT FOR ENFORCING TAXES ON ALCOHOL PRODUCTS
Benjamin Franklin was once quoted saying “In this life only two things are definite: Death and taxes”. So a drunkard is assuring himself that he is contributing to tax revenues, while trying to reach his death hurriedly compared to if he is sober. But then again, a lot of people consider alcohol as the anaesthesia in which they can endure the pain of the operations of their mere existence. So the question is whether it is virtuous and ethical to tax this vice, which is also serving as a balm to some of life’s aches.
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Excise taxes are indirect or ancillary taxes on the purchase or consumption of a product, and in this case, alcohol. This kind of tax is often shouldered by the people who use alcohol. A tax which is based on the presence of alcohol in a product is an excise tax. Excise tax is usually a fixed rate tax expressed as a monetary amount per measure of the product. This means that the higher the amount of alcohol in a product, the higher is the excise tax. Therefore it follows that whisky and vodka will have higher excise taxes compared to wine or beer. The purpose of excise tax is either to increase the proceeds of a country or to deter people from buying the product and transform the consumption pattern of its citizen (ICAP, 2006).
New Zealand is a country who prides itself of its Accident Compensation Corporation or ACC. Any accident to the citizen or resident or (and in some cases even tourists) of the country be it in school at home or at work will be paid for by ACC which is subsidized by the government. That is why the price of alcohol do not only stop at the price of the bottle or the contents thereof. It just starts there. Lower prices of alcohol will result to increase incidence of intoxication and even if the country will lower the legal limits for allowable blood alcohol level of drivers, the nuisance that alcohol consumption brings do not end with drunk driving. Intoxication can result to fist fights and more accidents. This therefore means more expenses for ACC to cover.