When evaluating alcohol price and tax policies, it is important to consider the context provided by other public policies, private market forces, and general economic conditions. For example, alcohol excise tax rates are not routinely increased to compensate for the effects of inflation. As a result, the “real” (i.e., inflation-adjusted) tax rates have declined over most of the postwar period, except for the significant tax increase that took effect in 1991. This erosion of real tax rates has contributed to overall declines in real beverage prices over time (see figure 1).
