IDEAS home Printed from https://ideas.repec.org/a/ifs/fistud/v20y1999i3p287-304.html
   My bibliography  Save this article

Alcohol taxes, tax revenues and the Single European Market

Author

Listed:
  • Ian Crawford

    () (Institute for Fiscal Studies and University of Surrey)

  • Sarah Tanner

Abstract

This paper addresses the issue of whether tax revenue from alcohol lost through cross-border shopping could be recouped by cutting excise duties. This in turn depends on the elasticity of demand for alcohol. We use data from the Family Expenditure Survey 1978-96 to estimate own- and cross-price elasticities of demand for beer, wine and spirits before and after completion of the Single Market. We find no evidence of a significant change in elasticities after the Single Market. The tax rates on beer and wine are currently below their revenue-maximising rates, implying that a cut in the duty rate on beer or wine would lead to a decrease in indirect tax revenue from alcohol. We cannot reject that the current tax rate on spirits is at the revenue-maximising rate, implying that further increases in the duty on spirits are likely to cause indirect tax revenue to fall.

Suggested Citation

  • Ian Crawford & Sarah Tanner, 1999. "Alcohol taxes, tax revenues and the Single European Market," Fiscal Studies, Institute for Fiscal Studies, vol. 20(3), pages 287-304, September.
  • Handle: RePEc:ifs:fistud:v:20:y:1999:i:3:p:287-304
    as

    Download full text from publisher

    File URL: http://www.ifs.org.uk/fs/articles/0009a.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Ian Crawford & Sarah Tanner, 1995. "Bringing it all back home: alcohol taxation and cross-border shopping," Fiscal Studies, Institute for Fiscal Studies, pages 94-114.
    2. James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sijbren Cnossen, 2006. "Alcohol Taxation and Regulation in the European Union," CESifo Working Paper Series 1821, CESifo Group Munich.
    2. Aronsson, Thomas & Sjögren, Tomas, 2005. "Externalities, Border Trade and Illegal Production: An Optimal Tax Approach to Alcohol Policy," Umeå Economic Studies 654, Umeå University, Department of Economics.
    3. Ian Crawford & Sarah Tanner, 1995. "Bringing it all back home: alcohol taxation and cross-border shopping," Fiscal Studies, Institute for Fiscal Studies, pages 94-114.
    4. Griffith, Rachel & O'Connell, Martin & Smith, Kate, 2017. "Tax design in the alcohol market," CEPR Discussion Papers 11820, C.E.P.R. Discussion Papers.
    5. Rizzo, Leonzio, 2000. "Equalisation and Fiscal Competition," MPRA Paper 5335, University Library of Munich, Germany.
    6. Michael Keen, 2002. "Some International Issues in Commodity Taxation," IMF Working Papers 02/124, International Monetary Fund.
    7. Katarina Nordblom, 2011. "The complex attitudes to alcohol taxation," Applied Economics, Taylor & Francis Journals, vol. 43(24), pages 3355-3364.
    8. Hella, Heikki & Mankinen, Reijo, 1999. "Alcoholic Beverage Taxation: Alternatives and Impacts," Discussion Papers 696, The Research Institute of the Finnish Economy.
    9. repec:kap:iaecre:v:16:y:2010:i:2:p:135-148 is not listed on IDEAS
    10. Beatty, Timothy K.M. & Larsen, Erling Røed & Sommervoll, Dag Einar, 2009. "Driven to drink: Sin taxes near a border," Journal of Health Economics, Elsevier, vol. 28(6), pages 1175-1184, December.
    11. repec:kap:jincot:v:17:y:2017:i:4:d:10.1007_s10842-017-0244-5 is not listed on IDEAS
    12. Rachel Griffith & Martin O'Connell & Kate Smith, 2017. "Design of optimal corrective taxes in the alcohol market," IFS Working Papers W17/02, Institute for Fiscal Studies.
    13. Rinaldi, Gustavo, 2007. "The use of economic tools to develop a consensus on alcohol policies within and between jurisdictions," MPRA Paper 21941, University Library of Munich, Germany, revised 18 Apr 2007.
    14. Ana Gil & José Molina, 2009. "Alcohol demand among young people in Spain: an addictive QUAIDS," Empirical Economics, Springer, pages 515-530.
    15. Andrés Leal & Julio López-Laborda & Fernando Rodrigo, 2010. "Cross-Border Shopping: A Survey," International Advances in Economic Research, Springer;International Atlantic Economic Society, pages 135-148.
    16. Lacruz, Ana Isabel Gil & Lacruz, Marta Gil, 2010. "Does alcohol consumption reinforce mental problems in adolescence?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(2), pages 223-232, April.
    17. Rachel Griffith & Martin O'Connell & Kate Smith, 2017. "Tax design in the alcohol market," IFS Working Papers W17/28, Institute for Fiscal Studies.

    More about this item

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ifs:fistud:v:20:y:1999:i:3:p:287-304. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Emma Hyman). General contact details of provider: http://edirc.repec.org/data/ifsssuk.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.