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TABLE 9-1 Federal Alcoholic Beverage Excise Taxes

Beverage Type

Tax as of 11/1/51

Current Tax

Inflation-Adjusted Value of 11/1/51 Tax

Distilled spirits

$10.50/proof gal.

$13.50/proof gal.

$71.87/proof gal.

Wine

Not over 14%

$0.17/wine gal.

$1.07/wine gal.

$1.16/wine gal.

14-21%

$0.67/wine gal.

$1.57/wine gal.

$4.59/wine gal.

21-24%

$2.25/wine gal.

$3.15/wine gal.

$15.40/wine gal.

Beer

$9.00/barrel

$18.00/barrel

$61.60/barrel

NOTES: Current taxes were set January 1, 1991. Other wine taxes include taxes on champagne/sparkling wines and artificially carbonated wines. Inflation-adjusted values are based on the All Urban Consumers consumer price index series using the values of the index from November 1951 to August 2002.

SOURCE: Bureau of Alcohol, Tobacco, and Firearms (2002).

ernment budget deficits (see Table 9-1).3 In addition, the rates applied to the alcohol contained in different beverages vary, with current federal taxes amounting to approximately 21 cents per ounce of pure alcohol in spirits, 10 cents per ounce of pure alcohol in beer, and 7 cents per ounce of pure alcohol in table wine (DHHS, 2000).

Because of the infrequent and modest increases in these taxes, their real (inflation-adjusted) value has declined substantially. The federal beer excise tax, for example, was set at $9 per 31-gallon barrel (16 cents per six-pack) on November 1, 1951, and maintained at that level until being doubled to $18 per barrel (32 cents per six-pack) on January 1, 1991. In real terms, however, the current federal beer excise tax is well below its 1951 value of $61.60 (August 2002 dollars). The same is true for spirits taxes, which were set at $10.50 per proof gallon ($1.68 per fifth of 80-proof alcohol) in 1951, raised to $12.50 per proof gallon in 1985, and then raised to their current level of $13.50 per proof gallon ($2.16 per fifth of 80-proof alcohol) in 1991. Again, the current tax is well below the $71.87 (August 2002 dollars) that would be needed to reach the real value of the distilled spirits tax in effect in late 1951. Federal wine taxes are more varied, with different taxes applied based on alcohol content. These taxes currently range from $1.07 per wine gallon for wine with alcohol content not more than 14 percent to $3.40 per wine gallon for champagne and sparkling wines. As with the other federal alcoholic beverage excise taxes, the inflation-adjusted values

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For example, federal beer and wine excise taxes were last increased in 1991 (the first increases in both since 1951) as part of the Omnibus Budget Reconciliation Act of 1990; this legislation also increased the distilled spirits tax for only the second time since 1951, with the previous increase in 1985 also the result of deficit reduction legislation.



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