Alcohol tax revenues increase during pandemic
Tax Facts by the Wisconsin Policy Forum
State excise tax revenue from the sale of alcoholic beverages increased nearly 17% in fiscal 2021, an annual increase that exceeds any seen for nearly five decades in Wisconsin.
While the impact of the pandemic on alcohol use is difficult to assess, this trend may be worth watching, in part because binge drinking has been one of Wisconsin’s long-standing public health concerns. .
Most states saw alcohol tax revenues increase in fiscal year 2021, according to national data. Yet while state-to-state data provides an imperfect basis for comparison, it does suggest that Wisconsin’s recent increases may outstrip most other states.
State excise tax revenue on alcoholic beverage sales reached $ 73.8 million in fiscal 2021 which ended June 30, an increase of 16.6% from compared to the $ 63.3 million collected in fiscal 2020, according to preliminary data from the State Revenue Department.
According to figures from the state’s annual tax report and preliminary data from the DOR, 2021 will likely mark the largest percentage increase in alcohol tax revenue in Wisconsin since 1972. In addition to six decades of available data, the only two fiscal years with higher percentage jumps – 1972 and 1964 – had increases in wine tax rates. The 1972 fiscal year also included an increase in the tax on alcoholic beverages and a lowering of the legal drinking age.
Excise taxes on alcohol in Wisconsin are based on the volume of beverage sold rather than its price. Prices vary according to the type of alcoholic drink: beer, wine, cider or liquor. The state’s 5 percent general sales tax also applies to alcohol sales and is collected by retailers based on price; these revenues are not included in this analysis.
Wisconsin has long ranked among the last states for the rates at which it taxes alcohol. Its beer tax rate is among the lowest in the country, ranking 48th out of 50 states in 2021, according to the Tax Foundation. Wisconsin’s wine tax rate also ranks 43rd and its alcohol rate 41st.
A consequence of this is that, despite the historic magnitude of the increase in revenue this year, its impact on the finances of the state as a whole will be marginal. However, the public health implications of increased alcohol consumption may be greater.
Surveys routinely show that residents of Wisconsin indulge in binge drinking more frequently than residents of most other states. Research has shown a recent increase in drinking and driving-related deaths in Wisconsin during the pandemic. The total number of alcohol-related deaths in Wisconsin has also increased, as has been the case nationally, over the past two decades.
Many people may have increased their alcohol consumption during the pandemic while maintaining moderation. However, if rising consumption levels continue and additional public health impacts materialize, policymakers may need to consider taking action.
This information is provided to members of the Wisconsin Newspaper Association as a service of the Wisconsin Policy Forum, the state’s primary resource for non-partisan state and local government research and civic education. Learn more at wispolicyforum.org.