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Cheers! Beer Taxes Fall Flat

It’s a scientifically demonstrated fact that whenever governments find themselves running short of cash, they immediately slap massive taxes on cigarettes and alcohol. No matter that these items happen to be purchased in disproportionate amounts by people who don’t have much money, and that such taxes are therefore highly regressive. And no matter (or not much, anyway) that companies in these industries invariably threaten to go belly-up or to take their business someplace else.


I have to admit to a certain sympathy with states’ attitudes in this case, at least as far as taxing cigarettes goes. I’m a nonsmoker, and if various governments decide they want to tax the tobacco industry out of existence, that’s just fine by me.


Higher taxes on beer, though? That’s different.


That’s personal.


So, on learning this week of the demise of a bill in the California assembly that would have imposed a fee on sales of alcoholic beverages, my first impulse was to crack open a cold one in celebration. The state’s Assembly Health Committee scotched (sorry) the proposal, which would have assessed what bill sponsors call a “mitigation fee” equivalent to 10 cents per drink for beer, wine, and spirits. The levy would have been collected from liquor wholesalers doing business in the state, and was expected to raise more than $1.4 billion a year to fund alcohol-related services such as treatment and recovery programs, hospitalization and rehabilitation, and criminal justice and enforcement.


In Wisconsin, a bill aimed at increasing the beer tax by 500 percent, from 0.6 cents to 3 cents a bottle, seems headed for a similar fate. The state’s breweries and bars have faced down similar measures for the past 40 years, and the bill’s sponsor, Rep. Terese Berceau, says she’s “not going to expect miracles,” according to an Associated Press story.


The mega-kegger of all beer tax hikes is working its way through committees in the Oregon state legislature, and this one has a better chance of survival. Lawmakers want to raise the excise tax on beer, currently $2.60 per barrel, to around $50 — a staggering 1,900 percent increase. Exactly how much that translates to per glass is a matter of ferocious contention between proponents and opponents of the bill, with the former claiming it’s a mere 15 cents and the latter warning that it could be ten times that.


An extra $1.50 (if such it is) on a pint might be enough to make even this dedicated consumer pause before stepping up to the bar. But probably not for long. As for California’s dime-a-drink or Wisconsin’s 3 cents, it would take me about five nanoseconds to convince myself that hey, it’s all in a good cause. More prosecutors to corral drunk drivers, more prevention programs, more cash to reimburse hospitals for uncompensated emergency room admissions … who could argue with that? These are all hidden costs that are externalized by the liquor companies, so why shouldn’t they — why shouldn’t I — help pay for them?


Industry leaders will no doubt complain that new taxes are a threat to jobs in the middle of a recession, but they know that, thanks to people like me, demand for their products is solidly inelastic. And if any industry has a good shot at coming through a downturn unscathed, it’s got to be this one.


On sober second thoughts, I won’t be toasting the demise of California’s alcohol tax (or mitigation fee, or whatever) as I down my first Guinness this weekend. Nor will I be shedding any tears for Oregon’s renowned microbreweries. I’ll have to think of something else to drink to — better economic times ahead, maybe, for this industry and all others.


Cheers! ###

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