Preventing Youth Access to Alcohol at the Point of Sale

Historically, there are four dimensions or strategies that contribute to reducing underage drinking: The price of alcohol; how alcohol is promoted or advertised; the nature of the product (alcohol content and packaging); and, finally, where alcohol is accessed – or the place it is sold or distributed.

Place is the front line in the battle against underage drinking. Focusing on place – namely, preventing youth access to alcohol at the point of sale – has the greatest potential for achieving immediate and tangible results in the effort to reduce underage drinking. The NAS recognized the efficacy of this strategy in its report, noting, “Limiting youth access to alcohol has been shown to be effective in reducing and preventing underage drinking and drinking-related problems.” In fact, the report focused considerable attention on this strategy and included several recommendations aimed at strengthening efforts to reduce and prevent youth access to alcohol at the point of sale.

Giving retailers electronic age-verification technology and law enforcement more tools – a cost-effective strategy for immediately reducing underage drinking

Electronic age-verification technology is available to assist retailers in their efforts to prevent underage drinkers from purchasing alcohol. This technology scans the driver’s license to ensure that the customer can legally purchase alcohol and detects fake IDs, thus foiling attempts by minors to obtain alcohol illegally. Installation and use of this technology in retail outlets nationwide would lead to a dramatic reduction in underage drinking. The NAS study recommended using this tool, as well as others, to address the challenge of reducing youth access to alcohol.

As part of a strategy to control youth access to alcohol at the point of sale, electronic age-verification technology is relatively inexpensive compared to the approaches and tools that the other three strategies – price, promotion, and product – would employ. To facilitate the installation and use of this tool in retail outlets nationwide, the International Institute of Alcohol Awareness proposes using incentives to encourage storeowners to purchase, install, and use electronic age-verification technology—incentives that will make its purchase affordable.

Currently, retailers licensed to sell alcoholic beverages are required to pay an annual federal excise tax known as a special occupational tax, or SOT. An annual flat fee of $250, on average, is levied on these businesses. Revenue collected is included in the general fund of the federal government and appropriated by Congress.

There is strong evidence to suggest that this tax is grossly under-collected. In a survey conducted in 45 states and the District of Columbia by the National Liquor Law Enforcement Association and the Pacific Institute for Research and Evaluation, under contract with the National Highway Traffic Safety Administration, it was estimated that there are approximately 575,000 points of sale nationwide. Each of these businesses should be paying the $250 flat tax annually.

Assuming the accuracy of this national estimate of the number of establishments and full compliance with the Special Occupational Tax, the federal government would generate nearly $144 million in annual receipts from this revenue source. Research conducted by the National Liquor Law Enforcement Association estimates that approximately $70 million in owed revenue now goes uncollected each year.

A more aggressive collection effort could capture these uncollected taxes, adding as much as $70 million in new revenue to federal coffers annually. The International Institute for Alcohol Awareness recommends dedicating a portion of these collected funds to help retailers invest in electronic age-verification technology and to enhance enforcement efforts for their establishments. The federal government would help offset this cost through either a business tax credit or deduction.

This could be accomplished at no cost to taxpayers, since the portion of the SOT that currently goes uncollected would be used to pay for this technology investment incentive. Retailers who install electronic age-verification technology would receive training and technical assistance from a non-profit organization such as The Pacific Institute on Research and Evaluation and the National Liquor Law Enforcement Association under contract to the federal government.

In addition to preventing youth access to alcohol, which will contribute to an immediate and dramatic reduction in underage drinking, this program provides a significant and much-needed benefit to participating retailers. Retailers who unwittingly sell alcohol to minors can be held legally liable for the actions of underage drinkers and the harm they cause others and themselves. By installing and consistently using electronic age-verification technology, retailers would establish an affirmative, good-faith legal defense that shields them from legal responsibility for the harm caused by underage drinkers should they succeed at defeating this enforcement tool.