Alcohol Excise Taxes: Simplifying Rates Can Enhance Economic and Administrative Efficiency
GGD-90-123
Published: Sep 27, 1990. Publicly Released: Sep 27, 1990.
Skip to Highlights
Highlights
GAO examined the economic inefficiencies and administrative problems associated with the current alcohol excise tax system.
Recommendations
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| Due to the economic inefficiencies and administrative burdens existing under the current excise tax rate structure, Congress should consider simplifying the structure of alcohol excise taxes. Congress should consider standardizing alcohol excise tax rates across products on the basis of the percentage of alcohol in a beverage regardless of the mix of ingredients, thereby permitting the elimination of the section 5010 tax credit. | Congress did not eliminate the section 5010 tax credit or standardize rates when it increased alcohol and tobacco excise taxes effective January 1, 1991. | |
| Congress should consider the role of special occupational taxes in relation to the broader excise tax rate structure. Given the excessive administrative costs and compliance burdens involved in generating relatively small amounts of revenue, Congress should consider changing the special occupational tax by either: (1) eliminating it with a corresponding increase in excise tax rates; or (2) collecting the tax from only producers and importers and varying the tax on the basis of the size of the facility. | While legislation has been introduced proposing to eliminate special occupational taxes, enactment is very unlikely given the current budget climate. | |
| As Congress deliberates about the structure of those taxes, it may want to adjust the rates to keep pace with inflation. | Congress did not decide to adjust the rates to keep pace with inflation when it took action to increase alcohol and tobacco excise tax rates, effective January 1, 1991. |
Full Report
Public Inquiries
Topics
Alcohol taxesCollection proceduresEconomic analysisExcise taxesFederal taxesFiscal policiesGovernment collectionsInflationSales taxesTax administration