What Do Taxes and Drunk Driving Have in Common? (You’d Be Surprised!)

Maryland's discovered something here - the link between taxes and drunk driving.

Organizations in every state have implemented countless initiatives to reduce drunk driving. Maryland seems to have found one that works. They simply raised the sales tax on alcohol.

In 2011, Maryland raised the state sales tax on alcohol from 6 percent to 9 percent. At the time, the goal was to increase revenues. The hike has generated about $70 million annually, boosting the funds for health and education programs. Mission accomplished.

An additional side effect of this increase has surprised researchers, however. Alcohol-related motor vehicle accidents in Maryland dropped by 6 percent each year since the law was passed. The drunk driving rates fell 12 percent among drivers aged 15 to 34.

Researchers weren’t shocked to learn these rates dropped – they expected to see some reduction in accident rates. But they were amazed at the numbers. They didn’t expect such a significant difference.

The Impact and Looking to the Future

The researchers who studied this effect point to Maryland’s slightly different approach as the key to overall drunk driving reductions.

Typically, when states increase alcohol tax rates, they raise the excise tax (an indirect tax that the merchant includes in the product’s price). Maryland raised the sales tax. Researchers note that this makes consumers more aware of the increase, since the tax is added at the register.

Following this line of thinking, researchers also believe that young driver accidents had the biggest decrease because this age bracket is most sensitive to price increases.

It’s the first study to examine this angle of drunk driving reduction. Previous research focused on excise tax only, rather than sales tax. Based on their findings, researchers conclude that the sales tax increase “led to a significant reduction in the rate of all alcohol-positive drivers involved in injury crashes especially among drivers aged 15–34 years.” They also note that increasing alcohol taxes “is an important but often neglected intervention to reduce alcohol-impaired driving.”

Other states could replicate this method and likely see a reduction in their drunk driving rates. Supporters of the law hope that will be the case. The Maryland Citizen’s Health Initiative promoted the law as a method to decrease underage drinking and drunk driving. Since it’s proven to work, doesn’t it make sense for other states to try it? Vincent DeMarco, president of the organization, noted, “It’s very, very important that the public know that public health policies like this work. There was so much cynicism. …Our main interest was knowing that something very controversial was actually a public health success.”

Image Source: iStock