No Drink Tax

WASHINGTON – Today the American Beverage Institute (ABI), which represents 740 California restaurants, denounced alcohol tax hike bill AB1019 which is being voted on today at 1:30 in the Assembly Health Committee. This tax is disingenuously being called a “fee” in order to circumvent the backlash that comes with raising taxes.

Last year Governor Schwarzenegger proposed a “5 cents per drink” alcohol tax which was soundly rejected by the legislature. Now, this proposed “fee” would increase the cost per drink by double that amount. This bill was voted down by the Health Committee in April, but it has been brought up again for another vote today.

The fee would mean increases on the beer tax by over 500 percent and the liquor tax by over 250 percent. And fans of California’s world renowned wine industry would see the price increase by up to $1 per bottle, a 1280 percent increase.

“A tax by any other name is still a tax,” said ABI Managing Director Sarah Longwell. “Californians do not want an alcohol tax increase, regardless of whether it’s called a tax or a fee.”

The legislature rejected the tax last time around for good reason: Increasing alcohol taxes costs jobs and disproportionally hurts those who are least able to pay them.

According to the Tax Foundation, individuals earning less than $20,000 per year face federal alcohol tax burdens that are more than 18 times higher than individuals making in excess of $200,000. Not only are hospitality taxes on wine, beer, and spirits regressive, they also contribute to job loss: this tax would cause an estimated loss of 38,000 jobs at a time when the California economy has already lost some 260,000 jobs.

The tax burden on beverage alcohol is already so high that Federal, State and local governments collect over $2 in taxes for every $1 that the industry earns in profit. To the consumer, that means a massive 59 percent of the purchase price of a typical bottle of spirits goes to taxes and fees.

“The wine, beer, and spirits industries contribute over $90 billion annually to California’s economy,” said Longwell. “The hospitality industry is already paying its fair share.”

“This bill is a tax in a fee’s clothing,” Longwell continued. “California should reject this underhanded “fee” proposal just as swiftly as it rejected the last attempt to raise taxes.”