The Alcohol Industry Fights to Preserve an Antiquated Tax Structure

Posted on 18 June 2009

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BEALL_J07.jpgby Assemblymember Jim Beall

Ten Benjamins. One K. A grand.

A $1,000 – that’s what it costs every man, woman, and child to deal with the $38.4 billion in harm and havoc that alcohol creates in California.

It’s a hidden tax we can’t afford, not with a $24 billion budget deficit confronting us in Sacramento. We’ve already asked every taxpayer to dig deeper; they’re paying higher personal income taxes and more in sales tax. On deck are proposals by the Governor to do away with health insurance for 940,000 children of the working poor, deny thousands of our most fragile seniors in-home care, eliminate welfare, and end college grants that help low-income students improve their lives.

While California struggles with the pain of a recession that has eroded almost a third from its annual revenue, the alcohol industry fights to preserve an antiquated tax structure that inflation has eroded its value by 55 percent during the past 18 years. The industry pays about $327 million in state excise tax, an amount that defrays less than one percent of the cost of harm its products generate in accidents, fatalities, illnesses, crimes, imprisonments, and property damage. Meanwhile, Californians – including the one-third who does not imbibe – pay the rest of the bill.
We can’t afford continuing to overlook or underwrite alcohol’s toll. Proposed cuts to treatment services mean more untreated alcoholics making more emergency room visits, ending in more hospital admissions that will increase taxpayer costs and push up health care premiums for all of us.

And it means more crime. One third of more than 665,000 jail inmates surveyed nationwide were under the influence of alcohol when they were arrested, a 2002 U.S. Bureau of Justice Statistics found. Inadequate treatment of prison inmates with alcohol problems contributes to California’s appalling 70 percent recidivism rate.

The carnage caused by alcohol translates into someone being injured or killed in an accident every 16 minutes on our highways and streets. Health insurance administrative costs associated with alcohol abuse alone in California reaches $122 million, a University of California-San Francisco study reported in 2001. Twenty percent of your car insurance premium goes toward paying alcohol-fueled accidents, according to the highway patrol.

Our budget crisis demands that Big Alcohol begin paying its fair share of the terrible burden it creates. By raising fees on beer, wine, and liquor at the wholesale/distributor level to the equivalent of a dime a drink, California could raise $1.4 billion – money that could be used to help pay for alcohol-related trauma and emergency room services, law enforcement, research, treatment and counseling, and prevention. This new revenue could free general fund cash for other critical state needs, such as education, health care, and local programs.

There is widespread popular support for increasing alcohol levies. At least 75 percent of California voters support raising taxes on beer, liquor, and wine, according to surveys conducted this year by the Public Policy Institute of California and the Field Poll. Gov. Schwarzenegger has proposed raising the alcohol tax. Other states are considering increasing alcohol taxes. The U.S. Senate Finance Committee is looking at raising the federal excise tax.

For the alcohol industry this issue is all about how much of a profit they make, not about bearing up to their responsibility. The status quo works for them, but not for California. It’s time for Big Alcohol to begin paying its fair share.

Jim Beall represents Assembly District 24 which encompasses Saratoga, Campbell, and areas of San Jose, Santa Clara, and Los Gatos.