Title: Alcohol Taxes and Fees:
1- Alcohol Taxes and Fees
- An economic and historical perspective
- Bruce Lee Livingston, MPP
- Executive Director - Marin Institute
- Assembly Select Committee on Alcohol and Drug
Abuse - March 6, 2008
2A Brief History of California Tax/Fee Proposals
- 1990 failed initiative of 5 cent increase
- industry spent 30 million to defeat
- 1992 - last alcohol excise tax increase,
- a penny per drink
- 2003 SB 108 (Romero) 5 cent fee proposal for
alcohol-related emergency services - 2003 AB 216 (Chan) Fee proposal for up to
100 million for youth recovery/prevention - 2006 SB 656 (Romero) Proposal to allow
counties to assess sales tax for on-premise
consumption, - for revenue purposes only
3California Excise Tax Rates Lower than Other
States, the World(Rates are per gallon, US
dollars)
- CA Ave. w/Fed UK Sweden
- Beer .20 .25 .58 4.44 3.59
- Wine .20 .79 1.07 14.09 13.21
- Spirits 3.30 3.97 11.10 64.06
119.96 - CA tied for third lowest in wine rate, with
Texas only New York and Louisiana lower - Due to inflation, real value of CA taxes have
declined 45 percent since 1992
4CA Alcohol Taxes, 1969-2002
5CA Alcohol Taxes, 1985-2002
6U.S. Alcohol Taxes, 1950-2002
In 2002 Dollars
Source BATF, 2003 BLS, 2003
7Bigger Budgets need Bigger Taxes
- In 1992, the 302 million in alcohol excise tax
revenues, covered 0.35 of the states 85
billion budget. - In 2005, with the budget expanding to 173
billion, the 318 million collected from alcohol,
covered only 0.18 of our budget. - Alcohols excise tax contribution to the budget
is half of what it was in 1992.
8Costs of Alcohol in California(preliminary
estimates by Marin Institute)
- More than 9,000 lives lost annually
- Economic costs include
- Lost productivity 22.3 billion
- Criminal justice 7.3 billion
- Healthcare 6.4 billion
-
-
- Total costs 36 billion
- About 2/3 or 4.3 billion of healthcare is
covered by government programs
9How Big a Fee for health care or prevention
programs?
- About 2/3 of medical costs
- are incurred by government programs
- 4.3 billion of healthcare costs from alcohol
- out of 6.4 billion annually
10Alcohol Industry Pays Small Portion of Total Costs
- Sales taxes 1.56 billion
- Excise taxes 318 million
- License fees 50 million
- Total paid 1.94 billion
-
- Percentage of total costs covered
- by current taxes and fees 5
- Jobs are claimed as economic benefit,
- but reductions in alcohol consumption mean
- consumers purchase in other sectors.
11Alcohol Excise Taxes Lag Far Behind Tobacco
Revenues(Figures for 2005/2006)
- Tobacco tax revenue 1.09 billion
- Tobacco costs 19 billion
- Alcohol tax revenue 318 million
- Alcohol costs 36 billion
- Tobacco taxes are 6.5 times as effective
- as alcohol excise taxes in internalizing harm
12Proposed Alcohol Tax Increase
- Option one
- Across-the-board, 25 cent per drink increase on
beer, wine and spirits - Additional Revenue Generated 3 billion
- Option two
- Bring beer (which causes the most harm),
- up to tax level for distilled spirits
- Additional Revenue Generated 2 billion
- (Adding wine generates 300 million more)
-
13Taxes or Fees Could Cover
- Emergency room and trauma care
- Medi-Cal coverage for illness, injury
- Mental health and alcohol treatment
- Dedicated alcohol prevention programs
- (at ADP)
- Alcohol ad monitoring and counter-ads
- Policing of liquor stores, crime prevention
- Traffic safety, injury prevention
14Impact on Consumers of Taxes or Fees
- About 1/3 of population does NOT drink.
- Of those who DO DRINK
- Average is 3 drinks per week
- 50 drink 95 of total volume
- 10 drink 55 of total volume
- Source Paying the Tab, by Philip Cook
-
- Impacts felt hardly at all by most,
- while reducing harm from over-consumption.
15Public Support for Raising Tax?
- Polling done well ahead of 1990 initiative
- 73 percent said they would support a
nickel-a-drink tax - People more likely to support alcohol tax or fee
increases when they know the money will be
directed to alcohol-related programs
16Challenges Influence of Industry
- Industry spent more than 30 million to defeat
1990 tax initiative - Several legislative attempts failed since the
penny-per-drink increase in 1991 - According to a Marin Institute report,
- Big Alcohol donated 3.5 million
- to CA politicians in 2006 and
- spent additional 3 million on lobbying
17Possible Actions
- At minimum, charge alcohol user fee to cover ADP
and ABC services. (200 M or more) - The nexus is overwhelming.
- Adjust alcohol excise tax for inflation (.7 B)
- Consider 25 per drink excise surcharge (3 B)
- Consider 30 beer only excise surcharge (2 B),
- as beer is teen drug of choice, greatest harm
and greatest revenue - Make the alcohol producer pay, not the taxpayer
18Contact Information
-
- Bruce Lee Livingston, MPP
- Executive Director
- BruceL_at_MarinInstitute.org
- (415) 257-2480 (direct)
- www.MarinInstitute.org