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January 29, 2025 – Albuquerque, NM
Drunk driving has long been a major issue in New Mexico, and a new study by the University of New Mexico (UNM) suggests that raising alcohol taxes could significantly reduce fatalities caused by impaired drivers. With New Mexico ranking within the top five states for alcohol-related traffic deaths in 2023, researchers believe this approach could save lives, even though it wouldn’t eliminate the problem entirely.
The research was led by UNM Economics Professor Brady Horn, graduate student Ana Milan Hinostroza, and senior lecturer David Dixon. Their investigation into alcohol policies began several years ago through the state’s Research and Public Service Projects (RPSP) initiative. Initially, the team explored various issues, such as drinking age laws and liquor licenses, before honing in on alcohol taxes.
New Mexico currently imposes an excise tax on alcohol, which taxes beer and wine based on volume. Horn’s research shows that increasing these taxes could help reduce alcohol-related fatalities in the state.
“An economist can point out the economic rationale for why we should have alcohol taxes. It’s pretty simple: alcohol causes negative externalities,” Horn explained. “When there are markets with negative externalities, they produce too much of that good. An alcohol tax can nudge behavior where fewer people will drink alcohol. This will result in fewer negative externalities, meaning less crime, domestic violence, and less drinking and driving.”
The project began after State Senator Antonio Maestas asked the UNM Department of Economics to address contemporary economic issues facing New Mexico. The team published their findings in white papers in 2022 and 2023 and presented the study to the New Mexico legislature in fall 2024. Horn reported mixed reactions from lawmakers regarding the proposed tax increase.
“Everyone agrees we want to reduce the harms from alcohol, some people just don’t think taxation is the way to do it,” Horn said. “My role is to inform people and let them make their own decisions.”
Horn explained that New Mexico’s current alcohol tax system is based on an excise tax, which taxes producers per gallon of beer or per liter of wine sold in the state. For instance, the tax rate is 41 cents per gallon for beer and 45 cents per liter for wine. This tax system is considered standard compared to those of other states.
Horn’s research suggests that raising the tax by just 25 cents per drink could reduce alcohol consumption by up to 1.77% while generating an additional $132 million in tax revenue. Moreover, increasing beer excise taxes by 10 cents per gallon could potentially decrease alcohol-related traffic fatalities by nearly three each year.
After analyzing alcohol tax systems in other states, Horn is confident that increasing the excise tax would lead to fewer alcohol-related fatalities. However, he acknowledges the complexity of alcohol as both a social and economic issue.
“Alcohol is different because its consumption affects others who didn’t drink, through incidents like drinking and driving, domestic violence, or crime,” Horn said. “This is why economists see it as a market failure, where intervention is necessary.”
New Mexico’s Department of Public Safety reports that alcohol is involved in 40% of all fatal traffic crashes in the state, making it the largest contributor to traffic fatalities.
While a higher alcohol tax may not completely solve New Mexico’s drunk driving problem, researchers like Horn believe it is a critical step toward reducing the devastating consequences of alcohol misuse.
Disclaimer: This article is based on research conducted by the University of New Mexico. The views expressed are those of the researchers and do not necessarily reflect the opinions or policies of the New Mexico state government.
