The paper discusses issues surrounding the use of alcohol taxation as a means of reducing the costs imposed on New Zealand society by the abuse of alcohol. Econometric studies have indicated that, in common with most other industrialised countries, increases in the real price of alcoholic beverages in New Zealand reduce the per capita consumption of alcohol. Alcohol taxes are well-targeted towards those who are most likely to impose costs on society: 7% of drinkers drink approximately half of all alcohol consumed and therefore pay a large proportion of alcohol taxes. The common assertion that the burden of alcohol taxes falls disproportionately on low income groups is not supported by this analysis: alcohol taxation in New Zealand appears to be proportional rather than regressive.