Site icon Brookston Beer Bulletin

Prohibition Through Taxation

Being April Fool’s Day, this might almost seem laughable, if it wasn’t so serious and obvious an attempt to bring about prohibition through taxation. (And thanks to the many people who sent me information about this, you know who you are, I appreciate it.) A San Diego couple, Kent and Josephine Whitney, have introduced a ballot initiative they’re calling the “Alcohol-Related Harm and Damage Services Act of 2010.” If that sounds innocuous, it’s not. If they collect the required 433,971 signatures by August 23, it will be on the California ballot this November. The “Act” seeks to raise alcohol taxes as listed below. If you have a drink in your hand, put it down first. If you’re standing up, sit down. Drum roll, please:

No, those aren’t typos. The anticipated revenue of $7-9 billion would be used to fund the Department of Alcohol and Drug Programs, whatever that is. It won’t be used to fix the state deficit apparently.

In the OC Weekly Blog, Dave Lieberman correctly comments that “this is Prohibition through taxation” [a phrase I hope he won’t mind me borrowing]. He continues.

“The armchair libertarians must be having sedentary conniption fits from Yreka to Ysidro. Nowhere does it say that alcohol has to be a zero-sum game, not to mention the fact that the vast majority of those who do drink do so responsibly, which means you’re taxing those who play by the rules to pay for those who don’t.”

Ballotpedia lists a dozen reasons for the ballot measure, each one more fallacious than the last. The Whitney’s blame alcohol for murders, pregnant women drinking, burdens on health care, underage drinking, binge drinking; pretty much everything any neo-prohibitionists has ever thrown up against the wall, while naturally ignoring all of the personal responsibility for any of those actions. It’s as if they’ve drank the anti-alcohol kool-aid and believe unquestioningly all of the propaganda from those groups. To blame the alcohol and not the people who engage in those behaviors is a common tactic lately but ignores logic, common sense and any notion of fairness. It also reveals quite a lot about the mindset of the people who believe such nonsense. Also, if the ballot measure should pass, it would declare all of that nonsensically bad propaganda masquerading as statistics as true!

It also ignores the physical and mental health benefits of responsibly drinking moderate amounts of alcohol. Numerous studies have shown many, many health benefits to moderate drinking, not least of which are the many studies that show that people who drink moderately tend to live longer and be healthier than people who either abstain or overindulge. So in effect, this ballot measure would most likely make people in California less healthy.

Curiously, the State Attorney General’s summary says:

Additional state revenues of between $7 billion and $9 billion annually from an increase in state excise taxes on alcoholic beverages, with the proceeds going to support alcohol-related programs and services. A decrease in state and local revenues from existing excise and sales taxes on alcoholic beverages of several hundred million dollars annually due to a likely decline in consumption of alcoholic beverages.

The Initiative’s Analysis from the state Legislative Analyst’s Office goes into more detail but remains similarly conservative in the negative consequences while swallowing wholesale the notion that it would actually bring in the estimated $7-9 billion in additional excise tax revenue. First of all, the loss of business and company’s going out of business outright would cause that figure to be greatly reduced from the start. If a bottle of wine has at least $5.11 in state excise taxes plus all of the other taxes, plus the costs of ingredients, manufacture, packaging, transportation, etc. even two-buck chuck is going to become ten-buck Ken or worse.

Similarly, if just the state excise tax on a six-pack of beer starts at $6.08, again plus every other cost of doing business, just who in their right mind believes that consumers will continue to merrily drink the same amounts at exponentially higher prices? Don’t even get me started on how many dollars will fly out of California by people driving to bordering states to buy their alcohol. You’re going to see a cottage industry in just-over-the-border liquor stores popping up wherever a road leaves California. It’s absurd to believe the revenue stream would continue at the same rate.

That analysis suggests that only several hundreds of millions of dollars would be lost in decreased consumption seems laughably conservative. Here’s some of their reasoning, from the analysis:

Effects on Existing State Excise and SUT Revenues. The decline in taxable consumption of alcoholic beverages that would likely be caused by this measure would reduce the revenues received for the General Fund from the existing state excise and SUT revenues. We estimate that this could potentially result in a loss of state revenues of several hundred million dollars annually.

Effects on Local Revenues. The likely decline in taxable consumption of alcoholic beverages due to the increase in the excise tax imposed under this measure would also affect local SUT revenues. We estimate that local governments, primarily cities and counties, would experience a decrease in sales tax revenues of approximately $100 million on a statewide basis due to the excise tax increase.

Indirect Economic Effects. If the measure were to result in declines in overall economic activity in California, it could produce indirect state and local revenue losses. Such effects could occur, for example, if businesses were to close because they could no longer remain profitable as the overall economy adjusted to a lower demand for alcohol in the long run. If these lost resources were not redirected back to California’s economy into equal or more productive activities, then it would likely lead to a net loss in taxable income and spending for state and local governments. The magnitude of these potential revenue losses is unknown.

See that last bit? “The magnitude of these potential revenue losses is unknown.” I can pretty much tell you it’s going to be staggering. It would be a near prohibition, with a return to illegal hooch. After homebrewers start selling their kitchen beers under the table, new law enforcement agencies will be created to stop them, every homebrew shop will be watched and anyone with a pair of rubber boots will be under suspicion.

So who the hell are the Whitneys and why are they trying to effect an alcoholic Armageddon? Those are good questions, I think, and there’s at least one very disturbing possibility. The V Bit Set speculates that it may be simply for money. Doing some detective work, internet style, he points out there is a Kent Whitney in the San Diego area who owns the 21st Century Wellness Initiative, and the ballot measure would provide “fifteen percent for the funding of grants for naturopathic treatment and recovery programs for alcohol addiction.” Are the two connected? He admits it’s wild conjecture at this point, but it is compelling nonetheless. If it turns out to be true, how vile and repugnant would this be? On an unimaginable scale, I’d have to say. To attack an entire healthy industry, putting thousands of workers and hundreds of businesses at risk of being removed from the economy for personal gain would be one of the most abominable acts of all time. If they’re sincere, it’s clear they either didn’t think through their actions or are entirely hostile to anyone who enjoys, makes or sells alcohol.

Exit mobile version