Historique
Rapport
The budgetary implications of drug prohibition
Auteur(s) :
MIRON, J. A.
Année
2010
Page(s) :
43 p.
Langue(s) :
Anglais
Refs biblio. :
44
Domaine :
Drogues illicites
Discipline :
MAR (Marchés / Markets)
Thésaurus géographique
ETATS-UNIS
Thésaurus mots-clés
LEGALISATION
;
ECONOMIE
;
FISCALITE
;
TAXE
;
CANNABIS
;
HEROINE
;
COCAINE
Résumé :
Government prohibition of drugs is the subject of ongoing debate.
One issue in this debate is the effect of prohibition on government budgets. Prohibition entails direct enforcement costs and prevents taxation of drug production and sale.
This report examines the budgetary implications of legalizing drugs.
The report estimates that legalizing drugs would save roughly $48.7 billion per year in government expenditure on enforcement of prohibition. $33.1 billion of this savings would accrue to state and local governments, while $15.6 billion would accrue to the federal government. Approximately $13.7 billion of the savings would results from legalization of marijuana, $22.3 billion from legalization of cocaine and heroin, and $12.8 from legalization of other drugs.
The report also estimates that drug legalization would yield tax revenue of $34.3 billion annually, assuming legal drugs are taxed at rates comparable to those on alcohol and tobacco. Approximately $6.4 billion of this revenue would result from legalization of marijuana, $23.9 billion from legalization of cocaine and heroin, and $4.0 billion from legalization of other drugs.
State-by-state breakdowns provide a rough indication of legalization’s impacts on state budgets, but these estimates are less reliable than those for the overall economy.
Whether drug legalization is a desirable policy depends on many factors other than the budgetary impacts discussed here. Rational debate about drug policy should nevertheless consider these budgetary effects.
The estimates provided here are not definitive estimates of the budgetary implications of a legalized regime for currently illegal drugs. The analysis employs assumptions that plausibly err on the conservative side, but substantial uncertainty remains about the magnitude of the budgetary impacts.
One issue in this debate is the effect of prohibition on government budgets. Prohibition entails direct enforcement costs and prevents taxation of drug production and sale.
This report examines the budgetary implications of legalizing drugs.
The report estimates that legalizing drugs would save roughly $48.7 billion per year in government expenditure on enforcement of prohibition. $33.1 billion of this savings would accrue to state and local governments, while $15.6 billion would accrue to the federal government. Approximately $13.7 billion of the savings would results from legalization of marijuana, $22.3 billion from legalization of cocaine and heroin, and $12.8 from legalization of other drugs.
The report also estimates that drug legalization would yield tax revenue of $34.3 billion annually, assuming legal drugs are taxed at rates comparable to those on alcohol and tobacco. Approximately $6.4 billion of this revenue would result from legalization of marijuana, $23.9 billion from legalization of cocaine and heroin, and $4.0 billion from legalization of other drugs.
State-by-state breakdowns provide a rough indication of legalization’s impacts on state budgets, but these estimates are less reliable than those for the overall economy.
Whether drug legalization is a desirable policy depends on many factors other than the budgetary impacts discussed here. Rational debate about drug policy should nevertheless consider these budgetary effects.
The estimates provided here are not definitive estimates of the budgetary implications of a legalized regime for currently illegal drugs. The analysis employs assumptions that plausibly err on the conservative side, but substantial uncertainty remains about the magnitude of the budgetary impacts.
Affiliation :
Department of Economics, Harvard University, USA