State alcohol tax awaits decision

A bill that would raise the tax on wholesale alcohol passed a
state Senate committee late last month ““ a move that has the
alcohol industry crying foul.

The tax, which would add five cents to the wholesale price of
every alcoholic drink sold, would be used to reimburse emergency
rooms for alcohol-related admits.

The bill passed the Senate health committee March 26 but must be
approved by the full Senate and the Assembly before it becomes
law.

Sen. Gloria Romero (D-Los Angeles) introduced the bill, called
“five for life,” to help struggling emergency rooms and
trauma centers, citing a statistic that lists 60 percent of trauma
patients as testing positive for alcohol.

Romero’s press secretary, Kristine Guerrero, said 60
California emergency centers have closed since 1990, and 15 trauma
centers have closed since 1980.

The bill was introduced a year ago, but had been stalled by
opposition from the alcohol lobby, Guerrero said.

The alcohol industry considers itself unfairly singled out for
taxation, and representatives said it will force retailers to raise
prices significantly in order to maintain their profit margin.

Forty-four percent of the retail price of beer already goes to
taxes, said Henry Dominguez, regional vice president of Government
Affairs for Anheuser-Busch.

“Beer drinkers should not be singled out through
regressive tax policy to pay for programs that deal with broad
social issues,” Dominguez said, adding that Anheuser-Busch
also voluntarily invests in educational programs to reduce underage
drinking rates.

But Harold Cole, a UCLA economics professor, said the idea of
taxing alcohol to fund emergency rooms is a classic approach to a
social problem.

“The logic is that alcohol creates alcohol-related
injuries. Your activities generate a cost for society that you are
not paying,” Cole said.

“A tax would raise the private cost (of alcohol) so that
it is more in line with the social cost.”

Cole qualified the simplicity of his statement by explaining
that the social and private costs of goods do not line up very
often, so a society has to decide which prices it wants to
manipulate.

Romero contends the “five for life” bill is designed
to offset the cost of alcohol-related accidents, not to punish
California’s large wine and spirits industry, but wholesalers
call it a “sin tax.”

“It’s just another attempt to finance inefficient
government,” said Walt Gample, president of Allied Imports
and Wholesalers.

“Every time there is a tax increase it is passed on to the
consumers,” Gample said.

Some in the wine industry, like Greg Gautnier, director of sales
and marketing for Bouchaine Vineyards, are concerned about how this
tax could effect demand for their products.

“It would add another 50 cents per glass, which would
effect consumption quite a bit,” Gautnier said.

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