ABSTRACT
The Cook analysis is extremely difficult to follow, at least to this non-economist. Walsh’s and Cook’s apparent disagreements constitute a difficult puzzle to solve. Instead of beginning at a theoretical level, drawing assumptions concerning consumer behaviour, the lawyer goes to the tax laws and regulations themselves and tries to make sense of the actual mechanisms employed. Most tax provisions fall outside tax’s revenue collection function and bear no relationship to ‘rational’ consumer behaviour and current cost-benefit analyses. Tax expenditures have a more profound impact at the level of production than at the level of consumption. In the US, tax policies provide very powerful incentives to the large alcohol manufacturers, which have contributed substantially to the monopolisation of alcohol production. The US government has recently moved greatly to increase incentives for capital investments, which has surely benefited beer and spirit industries in particular because they are so capital-intensive.
