A little over a week ago, California Governor Arnold Schwarzenegger proposed raising the state excise taxes on alcohol producers in order to fix the state’s budget problems, in effect punishing an entire industry for a problem not of their making. Neo-Prohibitionist groups across the country heaped praise on the proposal, none more glowingly than the Marin Institute, a neo-prohibitionist organization that styles itself as an “alcohol industry watchdog.” Their mission is “to protect the public from the impact of the alcohol industry’s negative practices. [They] monitor and expose the alcohol industry’s harmful actions related to products, promotions and social influence, and support communities in their efforts to reject these damaging activities.”
One can only assume that the supposed “negative practices” and “social influence” they claim to be watching must surely include the notion that lying is morally wrong and the idea that no one should use false or misleading information to sell a product … or an agenda? If so, I have one question. Who watches the watchdog?
I just received their latest missive to their membership both urging and titled “Tell Your California Assembly and Senate Leaders to Pass the Tax Proposal” and further spreading the belief that “A Nickel a Drink is the Change We Need!” I’ve already written about why the proposed tax increase is unfair on many levels, but what struck me about their latest public pronouncement is how riddled with misleading statements and outright falsehoods it is.
About the only sentence that’s essentially true is the first one, where they state that “California Governor Schwarzenegger has proposed a nickel a drink alcohol tax increase on wine, beer, and distilled spirits to take effect January 1.” That is true. Unfortunately, that’s the last time you’ll get to read those words.
The second sentence is: “This tax increase on alcohol producers is long overdue.” That statement’s wrong on several levels. First, the only industries in America that pay excise taxes on the goods they produce are alcohol and tobacco. The reason they do so has to do with morals and their origin goes back to the Civil War when temperance zealots managed to make temporary war measure permanent because they didn’t like alcohol on moral grounds.
Our country is supposed to be founded on the principle of separation of church and state, meaning one set of morals have no place dictating policy that effects everyone. Since excise taxes are already an unfair measure that punishes industries that some people deem against their own morals, there’s nothing overdue about an increase of a tax that’s already fundamentally wrong.
Next up. “Alcohol-related problems now cost the Californians $38 billion dollars annually.” This is a number made up by the Marin Institute from a study they themselves funded and which they then parrot as if it were gospel. It’s not. Not even close. There are holes in reasoning all the way through it. Anyone can use statistics to say whatever they want, but that doesn’t make them true. What they also don’t mention is that just the beer industry (that is, not including the wine and spirits segments) contributes $24,646,539,216 to California’s $1.6 trillion economy, and the beer industry alone represents just over 1.5% of our state economy. Employees of beer businesses pay annually over $3 billion in federal, state and local taxes ($3,408,824,767) and over $240 million ($242,183,691) in Consumption Taxes.
But just for argument’s sake, let’s assume that the alcohol industry does “cost Californians” some amount of money each year. Is the alcohol industry the only one that costs people money from the products they sell? Let’s talk about the burdens on the healthcare system from soda, red meat, and everything with high fructose corn syrup. How much do the diseases associated with those bad-food-related problems cost taxpayers? I’m willing to bet it’s many times that $38 billion figure neo-prohibitionists throw around. If it’s traffic fatalities, what business probably has more to do with those than any other? Simple, car manufacturers. Automobiles could be made safer, but that would add to the price of a car and industry lobbyists have resisted more stringent safety standards. And talk about costs to taxpayers, who do you think pays for all the roads cars drive on? You guessed it, you and me. If car companies had to pay for the roads which the products they sell use, cars would cost many times their current price. How about mobile phones, which studies have shown using while driving make people as likely to have an accident as the average drunk driver? Aren’t those traffic accidents costing taxpayers money? Of course they are, yet I don’t see neo-prohibitionists attacking Verizon or AT&T for tax increases to pay their “fair share.”
I could go on and on, but the point is that every single business provides benefits and exacts costs to society. Everything has pros and cons. But it’s a slippery slope we’ll start sliding down if we try to make every business reconcile those costs and benefits in order to balance government budgets. But of course, it’s not really about fairness. It’s about attacking one industry because certain people don’t like it.
In the second half of sentence three, they continue with “while the last alcohol tax increase in the state was in 1992.” What they don’t tell is at roughly the same time, the federal excise tax was doubled, from $9 to $18 per barrel! Also, the state excise tax they’re complaining about is only one of around 21 separate taxes businesses pay, many which have indeed increased in the sixteen years since 1992. And of those, four are unique to the alcohol business, meaning no other businesses (except tobacco) have to pay those. The alcohol industry already pays more taxes than any other product made and sold in the U.S.
Next, the Marin Institute insists that the “nickel a drink tax increase will raise $878 million over the next 18 months and help reduce the state’s serious budget shortfall.” That number’s nowhere near the figure that the Governor’s own calculation predicts, which is only $293 million. That comes nowhere close to “fixing” our budget, and simply unfairly harms an industry already struggling to recover from record increases of crucial ingredients, like hops and malt.
That’s followed up by “[t]he new tax revenue will be specifically allocated for alcohol treatment and prevention programs.” Okay, but doesn’t that negate the statement that it will “help reduce the state’s serious budget shortfall” if this money is earmarked for specific programs. Even if it’s just some of the money, it’s incorrect to say this will fix the budget if the revenue isn’t used to fund budget items, but instead a specific state expenditure. But what the Marin Institute is also leaving out is that the proposed use of the alcohol tax revenue will fund both “drug and alcohol abuse prevention and treatment services.” That means that while the neo-prohibitionists are arguing that the alcohol industry should pay for the problems they believe are created by alcohol, they also believe the industry should pay for prevention and treatment services from drug abuse, something they clearly can’t pin on the alcohol industry. And if that doesn’t convince you fairness is just not in their vocabulary, then I don’t know what would.
I think a better use of the excise tax revenue would be to fund public transit. That would create conditions where people could get where they’re going without having to drive in the first place, thus eliminating the alcohol-related traffic accidents and deaths. Of course, it was the automobile manufacturers and oil companies who bought up and dismantled public transit systems all over the country so they could sell more cars in the early part of the last century. That’s one of the reasons that people have to drive everywhere now. But it’s easier to make alcohol the bogeyman than addressing the real source of the problem. It’s easier to punish everybody who drinks, even though the majority do so responsibly, than to advocate for a true fix to problems associated with driving drunk.
They sum up by stating that “[a] nickel a drink will save lives, reduce crime, and lower the devastating costs of alcohol-related harm.” Of course, that hyperbole neglects to convincingly explain how. The notion of “saving lives” by raising the taxes, and therefore the price, is a complicated stretch of logic. I know there are studies funded by and created by neo-prohibitionsts that claim that, but critics have also questioned those findings. Their claim, and the underlying statistics, is a Gordian Knot and I won’t try to tackle all that here. Suffice it to say, it’s not as cut and dry as the Marin Institute and others would have you believe. As for reducing crime, they haven’t offered any rationale for why more expensive alcohol would reduce crime. If anything, it’s seems that people strapped for cash might be more inclined toward theft if the price was higher, not less. And as for the costs, well I’ve already examined that canard above.
The e-mail concludes by urging people to “tell your State Assembly Member and Senator that a nickel a drink is the change we need, and to pass this important policy proposal as soon as possible.” I can’t help but be surprised to see neo-prohibitionists — an overwhelmingly socially conservative bunch — co-opt liberal socialist (and President-elect) Barack Obama’s tagline and appropriate it for their own use. And that last bit, that this is an “important policy proposal” sticks in my craw. This is our state government looking for a convenient scapegoat to raise money to get us out of a fix that was created by politics, not alcohol. That neo-prohibitionists have jumped on a bandwagon of inadvertently helping the state is merely them being opportunistic. This is simply not a policy proposal, it’s one agenda helping another because each gets what they want, despite the obvious lack of fairness or logic, and the consequences be damned.
Sign up today for Support Your Local Brewery, an activist organization of the Brewers Association. Their mission “is to promote and protect American craft beer, American craft brewers and the community of brewing enthusiasts.”
The goal of Support Your Local Brewery is to support small, independent and traditional brewers’ efforts to secure fair legislative and regulatory treatment by mobilizing beer enthusiasts across America into a national grass roots movement that will collectively impact the legislative and regulatory process when necessary.
Also, please sign up for their E-mail Action Alerts and you will be contacted in the “event that national or state legislative or regulatory initiatives threaten the livelihood of small, independent and traditional breweries.”
But even before that happens, you can send a message to your elected officials now. To figure out who your elected state representatives are, put your zip code into either Your Legislature or Project Vote Smart. Send them an e-mail, write them a letter or even give them a call. You’ll probably reach a staffer. Don’t worry. Tell them your side of the story, it will reach the ears of your Senator or Congressperson.
Let your elected officials know that you’re a responsible drinker, enjoy alcohol in moderation and that you vote. Let them know that raising the tax on alcohol is bad for the economy, harms the poor with higher prices disproportionally and that it’s unfair to punish an entire industry for a budget problem that they didn’t cause. We need to find solutions to the budget crisis facing California, and reportedly 38 other states, but we must fix these problems in a way that puts the burden equally on all citizens, not a proposal that targets one industry unfairly while leaving all others alone. We must fix problems that effect all of us together.
Think globally, but drink — and vote — locally.