Remember the simple fact that, as long as we believe people are responsible, have better information on themselves, and are better able to make choices regarding themselves then arbitrary regulation (or some lesser combination of these points), then we shouldn’t focus on the entire “social cost (private + external costs)” associated with alcohol when regulating.
The focus should only be on the external cost – the cost placed on other individuals from the choice of one individual. The private costs are already being taken account of when the choice is made.
As a result, if the calls of a 50% increase in excise tax are not based just on true external costs, but also broader private costs, they are asking for “too much tax” in a strict “efficiency” sense. They may be doing this as they genuinely dislike alcohol (although the risk of unintended consequences spring to mind here – namely people drinking more alcohol beverages if the cost per alcohol unit is lower, and also people brewing their own), or because they think people are inherently stupid. However, neither of these reasons seems like a good justification for policy.
For more discussion on this sort of stuff, see Offsetting Behaviour on the policy applications for an earlier BERL report, the search of “alcohol” on his site, our post on policy relevance, and the search of “alcohol” on our site 😉
I love this quote from Kiwiblog, “He even went out to Courtenay Place with a Police escort, and said he saw scenes that “no civilized society can relish”.” – if I was behind these scenes Geoff, I’m sorry 😉
Update 2: A facebook group based on Geoff’s quote.