Increase of more than 12,000 percent would create
prohibition-like actions
Increase of more than 12,000 percent would create prohibition-like actions
The idea of raising taxes on alcohol more than 1,200 percent will decimate the state’s wine industry and severely impact alcohol sales at stores, bars and restaurants. If passed, the Alcohol-Related Harm and Damage Services Act of 2010 would increase the excise tax on a bottle of wine by 12,675 percent, from the current 4 cents a bottle to $5.11. The proposal would also impose additional taxes on beer and spirits, tacking nearly an additional $6 onto a six-pack of beer and an additional $17 onto a 750-milliliter bottle of distilled spirits.
“This cannot pass,” wrote H. Geno Acevedo, president and brewmaster of the El Toro Brewing Co. in Morgan Hill, in an e-mail to reporter Sara Suddes.
A tax increase that high would create prohibition-like actions, including smuggling and the influx of organized crime.
The initiative’s backers – listed as Josephine and Kent M. Whitney – need 434,000 signatures by Aug. 23 to put the measure on the ballot. According to the proposal, revenue generated by the tax would finance programs that address alcohol-related harms. The text of the initiative cited $38.4 billion in alcohol-related problems in California alone as a major reason for increasing the tax.
Alcohol industry has paid very little in taxes for decades
Yes, research has shown that raising the taxes and price of alcohol leads to a decrease in consumption by youth, and reduces alcohol-related deaths and illness. Increasing the total price of alcohol has also been shown to decrease drinking and driving among all age groups. The level of alcohol taxes and the rules for serving alcohol make a difference in underage and high-risk drinking.
“Anything that would increase the price of the product is a good thing,” said Dina Campeau, who sits on the board of the South County Collaborative, a collaborative of nonprofits that advocates for access to health and human services. But from 4 cents to $5.11 for a bottle of wine and 11 cents to $6.08 for a six-pack of beer, is just insane. That’s not to say the alcohol industry has it tough. They’ve gotten often easy for years. The taxes on beer, the drink of choice for the vast majority of underage drinkers, vary from 2 cents per gallon in Wyoming to $1.07 in Alaska. Obviously, at 11 cents per six-pack, we’re not where we could be.
Modest increase in line with cigarette taxes should be imposed
“It’s ridiculous,” said George Guglielmo, winemaker and president of Guglielmo Winery in Morgan Hill, whose grandfather started the winery in 1925. “So ridiculous that I don’t think it’s going to go anywhere.”
Even though the Legislative Analyst’s Office projected the tax would produce annual additional revenues from $7 to $9 billion, the new tax would likely cause a reduction in consumption. Decreased consumption means less money for the state, fewer jobs and more wineries going out of business, vintners said. Is that what the initiatives backers want?
We understand the need to raise taxes. City, county and state officials are searching high and low – higher and lower than ever before – but a 1,200 percent increase won’t solve the problems. Perhaps a reasonable increase of 50 cents for a bottle of wine or six-pack of beer could raise some revenue. By comparison, California imposes an 87-cent tax on every pack of cigarettes.
“I understand the need to raise taxes,” said Cheryl Murphy Durzy, vice president of sales and marketing at Clos LaChance Winery in San Martin. “The state is in a crisis – I totally get it. But let’s be reasonable. If this passed, it would destroy the California wine industry.”
Maybe the state should live by the old Czech saying: “The government will fall that raises the price of beer.”
