No Drink Tax

According to a survey released last month, recession anxiety has crushed terrorism as America's top panic. Aside from making significant changes in their everyday lives, about half of respondents said that a friend or family member has recently lost his or her job.

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 the Indiana legislature may have yet to do the same. Legislators are trying to pass Indianapolis' revenue problems on to Indiana businesses and their customers through proposals like the alcohol tax increase in House Bill 1604.

This proposal, which just passed out of the Senate Committee on Appropriations, would raise government funds by $40 million, in part to bail out the Indianapolis Capital Improvement Board, which operates sports stadiums. In other words, at a time when the recession is hitting Hoosiers more than ever and unemployment is high, legislators want to solve budget problems 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. As common sense dictates, slapping "a few extra cents" on adult beverages in Indiana will have the same effect. This new tax would cause an estimated 1,700 Indiana workers to lose their jobs.

And to state the obvious, there's no hospitality industry bailout in the works, either.

Aside from wiping out thousands of hard-to-come-by jobs, statistics show that a hospitality tax hike could hit the industry's customers even harder. Roughly half of all beverage alcohol in the U.S. 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. In reality, however, higher drink taxes will never deter alcohol abusers. 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 paying for sports stadiums.

Rather than looking to the adult beverage industry as their virtual ATM, governments at all levels need to start getting smart about how they spend taxpayers' money.

Hoosiers should not stand by while their representatives pass revenue problems onto the employers, employees and customers of the hospitality industry -- or any other industry for that matter. Like their constituents, Indiana legislators first need to adjust their routines to better reflect the current economic climate. Everyone else is troubled enough.

Longwell is managing director of the American Beverage Institute in Washington