Are Alcohol Excise Taxes Overshifted to Prices? Systematic Review and Meta-Analysis of Empirical Evidence From 29 Studies

Abstract

This paper conducts the first comprehensive review and meta-analysis for estimates of alcohol tax pass-through rates. The review examines data coverage by country; econometric models; and results for under- or overshifting by beverage. Several primary studies indicate substantial over-shifting of alcohol taxes. Median rates also suggest taxes are overshifted. Precision weighted-averages calculated for two samples show beer taxes are overshifted and wine-spirits taxes are fully shifted. Meta-regressions corrected for publication bias indicate, however, that full-shifting of alcohol taxes cannot be rejected for any beverage. Results are useful for alcohol tax policy and future research on tax incidence.