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Policy Watch: Alcohol and Cigarette Taxes

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  • Michael Grossman

Abstract

Increased excise taxes on cigarettes and alcohol have been suggested as a means to finance (at least partially) the Clinton administration's proposed program of health care reform. We consider the revenue potential of cigarette and alcohol tax hikes and explore the effects on consumption and related outcomes. We present estimates of the social costs and implied optimal tax rates on cigarettes and alcohol. The bulk of the evidence presented here does support higher taxes on cigarettes and alcohol.

Suggested Citation

  • Michael Grossman, 1993. "Policy Watch: Alcohol and Cigarette Taxes," Journal of Economic Perspectives, American Economic Association, vol. 7(4), pages 211-222, Fall.
  • Handle: RePEc:aea:jecper:v:7:y:1993:i:4:p:211-22
    Note: DOI: 10.1257/jep.7.4.211
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.7.4.211
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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