Fiscal and Economic Impacts of Beverage Excise Taxes Imposed by Maine Public Law 629

Gabe, Todd (2008): Fiscal and Economic Impacts of Beverage Excise Taxes Imposed by Maine Public Law 629.

Abstract

The purpose of this study is to examine the fiscal and economic impacts of the new and increased taxes on malt liquor (i.e., beer), wine and soft drinks imposed by Public Law 629. By fiscal impacts, we mean the increase in beverage taxes that would be paid by households and businesses. Our analysis suggests that Public Law 629 would lead to an estimated $40.7 million in additional beverage taxes per year. Economic impacts refer to the changes in statewide economic activity (e.g., sales revenue, employment and income) that would occur as a result of the increased beverage taxes. Here, we find that – including multiplier effects – Public Law 629 would lead to an estimated statewide reduction in sales revenue of $26.3 million per year, with an accompanying loss of 395 full- and part-time jobs that provide $8.8 million in income (i.e., wages and salaries). Empirical results presented in this study are based on actual data and, in some cases, figures that are estimated using information from government and beverage industry sources. In addition, findings from published academic studies are used to make assumptions about the extent to which the beverage excise taxes imposed by Public Law 629 will raise retail prices and, in turn, how strongly consumers will respond to these price hikes. Results presented in this report are meant to be one piece of information, considered along with other economic and non-economic issues, used to inform the debate about Public Law 629.

• Item Type: MPRA Paper
• Language: English
• Keywords: Excise Taxes, Beverage Taxes, Economic Impact
• Subjects: H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents > H30 - General; L - Industrial Organization > L6 - Industry Studies: Manufacturing > L66 - Food ; Beverages ; Cosmetics ; Tobacco ; Wine and Spirits

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