(This resource corresponds to Module 2.)

Both states and communities can institute laws that have the effect of raising the prices of alcohol and tobacco products. At the state level, this can be done through excise taxes on alcohol and cigarettes. At the local level, communities can charge outlets a fee to acquire a license to sell alcohol products; they can also ban promotions that offer rebates or bar-sponsored "happy hour" bargains. Here are some examples of laws that have proven effective:

• Increase excise taxes on the sale of alcohol and cigarettes. Increasing the price of alcohol and tobacco through taxes is an effective way to reduce consumption: It reduces both the number of people who use and the amount consumed by users.¹ Research suggests that young people are particularly responsive to an increase in cigarette prices.²

  Alcohol excise tax hikes are primarily paid by the small number of drinkers who drink the most alcohol (and who are responsible for the highest concentration of alcohol-related problems and their costs to society).³ Most consumers do not detect a difference in price; rather, consumers pay in proportion to the amount they consume. The resulting revenue can then fund key state or community programs.⁴ For example, in 1993, New Mexico instituted a state alcohol excise tax increase that now generates $15 million annually in new revenues; the state allocates about one-third of this to local prevention and treatment activities.⁵

  Similarly, many states have raised the excise tax on cigarettes and used these revenues to fund tobacco prevention activities. California was among the first to approve a significant statewide increase in its tobacco excise tax. In 1988, California voters approved a referendum that called for a 25-cent increase in the State cigarette tax, with one-fourth of the $600 million annual revenue designated for tobacco research and prevention efforts designed to reduce the prevalence of smoking. Following this tax increase, total per-capita smoking in California fell at a higher rate than in the rest of the United States.⁶ While it is difficult to determine whether this decrease can be attributed to the tax alone or to the prevention and cessation activities, researchers assume that the price increase played a significant role in this downward trend.⁷

• Require licensing fees for alcohol outlets and tobacco vendors. While state agencies rarely grant local communities the power to impose taxes on alcohol, local jurisdictions do have the power to charge permit filing and business-license fees to cover the administrative and enforcement costs of regulating and monitoring alcohol sales activities.⁸ This can have the same end result—an increase in the retail price of alcohol—and is a feasible policy option for local communities. Some communities also charge nonrefundable permit-filing fees, from a few hundred to a few thousand dollars, which cover the costs of processing and enforcing applications for zoning permits.⁹ In Shoreview, Minnesota, for instance, a local ordinance requires tobacco vendors to be licensed by the city. License fees, at $250 per year, are used to fund merchant education efforts and compliance checks. A vendor’s license may be suspended if he or she receives three or more violations within 24 months.¹⁰



• Ban discounts on alcohol and tobacco products. Promotions, such as "happy hour" and "women drink for free," increase consumption of alcohol by lowering alcohol prices for short periods of time.¹¹ Communities can prevent restaurants and bars from hosting happy hours and other price promotions, or require that promotions be restricted to free food instead of lower alcohol prices.¹²

References

1. Chaloupka, F. J. and Grossman, M. (1996). Price, tobacco control policies, and youth smoking. Unpublished Working Paper No. 5740. Cambridge, MA: National Bureau of Economic Research; Edwards, G., Anderson, P., Babor, T. F., Casswell, S., Ferrence, R., Giesbrecht, N., Godfrey, C., Holder, H. D., Lemmens, P., Makela, K., Midanik. L. T., Norstrom, T., Osterberg, E., Romelsjo, A., Room, R., Simpura, J., and Skog, O. (1994). Alcohol policy and the public good. New York: Oxford University Press; National Cancer Institute (May, 1993). The impact of cigarette excise taxes on smoking among children and adults: Summary report of a National Cancer Institute expert panel. Paper presented at the annual information exchange; U.S. Department of Health and Human Services (1989). Reducing the health consequences of smoking: 25 years of progress. A report of the Surgeon General. Atlanta, GA: Office on Smoking and Health, Centers for Disease Control and Prevention; U.S. Department of Health and Human Services (1992). Youth access to tobacco. Washington, DC: Office of Evaluation and Inspectors, Office of the Inspector General; and U.S. Department of Health and Human Services (in press). The context for change: The efficacy of the interventions for smoking prevention and control. A report of the Surgeon General. Atlanta, GA: Office on Smoking and Health, Centers for Disease Control and Prevention.



2. Lewit, E. M., Hyland, A., Kerrebrock, N., and Cummings, K. M. (1997). Price, public policy, and smoking in young people. Tobacco Control, 6(Suppl. 2), S17–24; and Gardner, S. E. and Brounstein, P. J. (2001). Series guide to science-based practices. Principles of Substance Abuse Prevention. Rockville, MD: U.S. Department of Health and Human Services, Substance Abuse and Mental Health Services Administration, Center for Substance Abuse Prevention, Division of Knowledge Development and Evaluation. Available online at http://modelprograms.samhsa.gov/pdfs/pubs_principles.pdf.



3. Center for Science in the Public Interest (1996). State alcohol taxes and health: A citizen’s action guide. Washington, DC.



4. Center for Science in the Public Interest (1996). State alcohol taxes and health: A citizen’s action guide. Washington. DC; Toomey, T. and Wagenaar, A. (1999). Policy options for prevention: The case of alcohol; Journal of Public Health Policy, 20(2), 193–212; and Gardner, S. E., and Brounstein, P. J. (2001). Series guide to science-based Prevention Practices. Principles of Substance Abuse Prevention.



5. Center for Science in the Public Interest (1996). State alcohol taxes and health: A citizen’s action guide. Washington, DC.
   
   
6. Elder, J. P., Edwards, C. C., Conway, T. L., Kenney, E., Johnson, C. A., and Bennett E. (1996). Independent evaluation of the California Tobacco Education Program. Public Health Reports, 111(4), 353–358.
   
   
7. Elder, J. P., Edwards, C. C., Conway, T. L., Kenney, E., Johnson, C. A., and Bennett E. (1996). Independent evaluation of the California Tobacco Education Program. Public Health Reports, 111(4), 353–358.
   
   
8. Prevention Enhancement Protocols System (1999). Preventing problems related to alcohol availability: Environmental approaches. Rockville, MD: Substance Abuse and Mental Health Services Administration, Center for Substance Abuse Prevention.
   
   
9. Prevention Enhancement Protocols System (1999). Preventing problems related to alcohol availability: Environmental approaches. Rockville, MD: Substance Abuse and Mental Health Services Administration, Center for Substance Abuse Prevention.
   
   
10. Jacobson, P. D and Wasserman, J. (1997). Tobacco control laws: Implementation and enforcement. Santa Monica, CA: RAND.
    
    
11. Babor, T. F., Mendelson, J. H., Greenberg, I., and Kuehnle, J. (1978). Experimental analysis of the "happy hour": Effects of purchase price on alcohol consumption. Psychopharmacology, 58(1), 35–41; and Toomey, T. and Wagenaar, A. (1999). Policy options for prevention: The case of alcohol. Journal of Public Health Policy, 20(2), 193–212.
    
    
12. Toomey, T. and Wagenaar, A. (1999). Policy options for prevention: The case of alcohol. Journal of Public Health Policy, 20(2), 193–212.