E-Malt.com News article: USA: Proposal to increase state tax on beer in California by $1.80 a six-pack may be hard sell

A San Jose assemblyman's proposal to raise beer taxes in California would increase the cost of a six-pack by $1.80, The Press Democrat reported April 16.

Some said the tax, which would be levied per gallon of beer and likely force bar owners to raise prices for customers, would be another economic blow for people struggling to pay for gas, groceries and just about everything else.

"In a recession, people go out and drink more," said Eddy Aruda, who works in the oil and gas industry and quaffed a pint at the Fourth Street brewery this week. "It hits the guy who's already having problems even harder."

Jim Beall, a San Jose Democrat, acknowledged that his proposal is a "hard sell" given the downturn in the economy and formidable opposition from the alcohol industry.

Because the tax would require a constitutional amendment, two-thirds of the Assembly and Senate would have to approve it. A majority of California voters would then have to raise their collective mugs.

"We would highly doubt voters would approve this giant tax hike," said David Kline, spokesman for the California Taxpayers' Association. "We'd be surprised, frankly, if the Legislature put it on the ballot."

However, the public has generally supported so-called "sin taxes," which, in the case of tobacco, have helped reduce smoking rates among youth, according to Barbara Graves, director of prevention and planning for the Sonoma County Department of Health Services.

"We certainly believe an increase in beer prices would reduce youth drinking to some extent. How much, I don't know," said Graves, who has not seen a draft of Beall's tax proposal and could not comment specifically on it.

Beall, a freshman lawmaker and former Santa Clara County supervisor, said the tax would generate $2 billion a year to fund health services, crime prevention and programs to prevent underage drinking and addiction.

He said his research shows that California undertaxes brew relative to other states. The federal government last hiked beer taxes in 1991 by 2 cents a can.

Under Beall's proposal, the tax would increase by 30 cents per can or bottle, making California's beer tax the highest in the nation.

"The fair share of the cost of alcoholism has definitely not been borne by people that drink alcohol, or beer specifically. That's the reason we're proposing the tax," Beall said from his Sacramento office.

But lumping beer in with tobacco and hard liquor and taxing it accordingly did not sit well with Rohnert Park house painter Doug Getty, who said he enjoys a regular pint for its "anti-inflammatory properties."

"It takes the edge off a hard day's work, that's for sure," Getty said.

One beer producer estimated that the tax on a single barrel of brew would jump from $6.09 to about $89 under Beall's plan.

The only way Russian River Brewing customers wouldn't see a price increase as a result would be if the brew pub simply shut its doors, owner Natalie Cilurzo said.

"Small brewers don't have the economy of scale that large brewers do," she said. "We can't absorb those costs."

The brew pub already had to raise prices because of rising malt and hops costs, she said.

Beall said he is receptive to listening to manufacturers' concerns and revising his proposal, which has not yet been introduced.


16 April, 2008