Raise the Beer Tax: A Healthy Plan for an Ailing Budget

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Sometimes there are easy answers to hard problems. California faces a $1.6 billion budget shortfall, in large part due to miscounted healthcare costs. According to Alcohol Justice, a $0.25 per beer tax would cover that and more. Nothing could be simpler. As Alcohol Justice Executive Director/CEO Bruce Lee Livingston said, “A beer tax increase is common sense, fiscally responsible, and long overdue.”

California’s beer tax hasn’t been raised in a quarter of a century, and is in the bottom half nationally. (Its liquor and wine taxes rank even lower.) The state is hardly alone in this; very few states have raised that rate in the past decade, and only Louisiana has done so within the past year. Proposed hikes in New Mexico and Kansas face industry opposition, despite the steady depreciation of current taxes as compared to inflation.

Alcohol product excise taxes play two roles. First, they generally raise revenue. Alcohol Justice maintains a tax calculator that estimates the total financial benefit to states for raising their excise taxes. A simple $0.25 tax per drink of beer would bring in over $1.7 billion dollars to California’s general fund.

Second, excise taxes can direct funds straight to programs that address the harms of alcohol. This model, called Charge for Harm, essentially places the responsibility on alcohol sellers for offsetting the damage their products cause. The end result, though, is still a savings to the state government; California picks up the tab for an estimated $13.7 billion in alcohol-related costs annually, including outlays for healthcare and criminal justice.

California is overdue to increase its alcohol taxes. Governor Brown may have missed his chance this year, but the need will grow. “Each year alcohol taxes are not raised translates into a government subsidy of Big Alcohol,” said Michael Scippa, Alcohol Justice’s public affairs director. “It's time for our state leaders to add a beer tax increase to any budget-balancing plan.”

READ MORE about Charge for Harm.