Charge for harm fees: Alcohol mitigation funding for prevention services and health care impacts

Alcohol taxation in the US is 40 years behind tobacco taxation. The charge for harm or mitigation fee approach to alcohol pricing and taxation has great potential. We define the mitigation fee model, describe partial implementation in 21 US states and present case studies of three recent US advocacy campaigns. This alternative to general revenue excise taxes calculates the governmental harm/cost from alcohol use, and applies fee revenue directly to health and public safety programs mitigating harm. Mitigation fees internalize the externalities of consumption: simultaneously raising prices, reducing consumption and harm, and subsidizing alcohol-related non-profit and government programs. A $1.4 billion model fee program was rigorously written into 2009 California legislation. Governmental costs for health, prevention and public safety programs were to be funded by ten cent a drink alcohol fees. A groundbreaking nexus study of San Francisco, California, found $18 million in annual health care and treatment costs, proposing a municipal charge for harm fee of 3-5 cents a drink. Despite extensive advocacy campaigning, both proposals were defeated in November 2010 through a statewide ballot initiative funded by oil, tobacco and alcohol corporations. The initiative created insurmountable two-thirds voting requirements but challenges are underway. In 2011 a health care coalition in Maryland, USA, won an alcohol sales tax increase dedicating revenues to schools, disability services and health care. Mitigation fees and dedicated alcohol taxes poll well and are a good policy alternative, but industry clout is often insurmountable.