No Drink Tax

According to a new survey, recession anxiety has crushed terrorism as America’s top panic. Millions of unemployed and struggling Americans have had to learn hard lessons in budgeting and thrift in order to rise to these economic challenges. But it appears that Gov. David A. Paterson has yet to do the same.

Instead of altering the wasteful way that New York does business, the governor is trying to pass the government’s revenue crisis on to New York businesses and their customers through a proposal to raise alcohol taxes.

This tax would raise government funds by millions of dollars. In other words, at a time when the recession is hitting New Yorkers more than ever and unemployment is at a record high, Paterson wants to solve the budget problem by forcing a struggling industry and its customers to reach further into their pockets.

Economically, there’s a good reason the national beverage excise tax hasn’t been raised since 1991: That increase sent approximately 60,000 Americans in the brewing, distributing and retailing industries straight to the unemployment line.

Aside from wiping out thousands of jobs, statistics show that a hospitality tax hike could hit the industry’s customers even harder. Roughly half of all beverage alcohol in the United States is consumed in households with less than $50,000 in annual income — many of the same Americans bearing the brunt of the current downturn through foreclosures and unemployment.

It is well-known that the punishing effect of these hospitality taxes is felt most by lower-and middle-income Americans. 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.

Despite these disastrous consequences, a handful of teetotalers continue to cite the effects of a small group of hard-core drunken drivers as a reason to punish everyone. But as the National Institute on Alcohol Abuse and Alcoholism has found, raising prices does little to reduce consumption among the heaviest drinkers.

The millions of hospitality industry employees, business owners and responsible drinkers who will be penalized by the proposed beverage tax hike shouldn’t be responsible for fixing the state’s budget. That burden should fall on the governor and legislators whose job it is to take care of the state’s cash flow problem — and whose wasteful spending habits helped create it.

New Yorkers should not stand by while the state government passes its revenue problems onto the employers, employees and customers of the hospitality industry — or any other industry for that matter. Like their constituents, Paterson and the New York Legislature first need to adjust their routines to better reflect the current economic climate. Everyone else is troubled enough.

Sarah Longwell is managing director of the American Beverage Institute.