The Effect of an Alcohol Excise Tax Rate Increase on DUI Incidents, Evidence from Connecticut
Authors:-Mason Sheppard
Abstract-This research paper investigates the efficacy of alcohol excise taxes as a policy instrument to reduce the amount of alcohol-related traffic accidents. Using data from the University of Connecticut’s car crash repository and the National Oceanic and Atmospheric Administration, this study conducts an Ordinary Least Squares (OLS) regression analysis to determine the effect that a 2011 increase of 20% on the alcohol excise tax rate had on the daily average DUI rates in Connecticut, while controlling for average daily temperature and time of day. Historical data shows that alcohol excise tax rates have seen significant decreases since the 1970’s, lowering tax revenues and eroding a strong deterrent to alcohol over-consumption. Results indicate that the tax increase of 20% showed a negative correlation to DUI rates, reducing them by an average daily rate of 9.6%. This paper also reviews the literature on alcohol tax incidence and pass through rates, indicating that consumers bear the entire burden of such taxes, enhancing the impact of alcohol excise tax rate changes.
