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Alcohol tax: A dime is a dime is a dime

My turn

Posted: Friday, April 27, 2001

Normally I would find the topic "Alcohol Excise Tax," like most tax issues, confusing. If my father had not been killed by a drunk driver last year I am pretty sure this subject would not interest me in the least. Unfortunately it's a topic I know only too well.

There has been a lot of talk about the excise tax bill during this legislative session and because it's such a no-brainer for me I would like to explain how I came to this conclusion. I had a lot of help from Anne Schultz, the research analyst for the Advisory Board on Alcoholism and Drug Abuse:

Our first and only excise tax was passed in 1983. State excise tax is assessed on wholesalers who import alcoholic beverages into the state. This is not a tax meant for the local breweries, Chilkoot Charlie's, the Brown Jug and so on. It's not meant for the purchaser either. But out-of-state wholesalers (Budweiser, Miller, Seattle Wholesalers Association, for example) pass this on to the restaurants, bars and liquor stores. Do these retail stores want to pay for it? Certainly not and I don't blame them. So the tax gets passed on to the consumer - anyone who buys alcohol.

I was in Alaska when the 1983 tax was added. It didn't stop me from buying my beer and I am not aware of any alcohol establishments who went out of business. This is an extremely flexible market and most people who purchase liquor are aware of that fact. In 1983 most retailers took the increase and rounded up to the nearest dime or quarter - thereby actually making a profit.

The way the current excise tax is figured out is by the gallon - and I'll try to make this easy for you: The current tax on beer is 3 1/2 cents per gallon. There are 10.667 beers in a gallon. Three and a half cents tax per gallon divided by 10.667 beers equals $.00328 in tax on each beer.

If you raise the state tax on each beer by a dime, to 13.28 cents, there are still 10.667 beers in a gallon. The next tax on a gallon of beer would be 13.28 (cents) times 10.667 (beers), or $1.42. That's the amount of tax per gallon recommended in HB 225.

What's easier for the consumer to understand - $1.42 a gallon or 10 cents a beer? Few consumers buy beer by the gallon.

The wholesalers claim this would mean a 300 percent increase. It sounds like a lot, doesn't it? Reminds me of used car signs screaming, "50 percent off! Buy now!" That's a good way to get folks' attention and it's done all the time by those who want to muddy the waters. But the bottom line is a dime is a dime is a dime. If the tax hasn't changed since 1983 (thank you Mr. Budweiser and Ms. Miller Lite) then even a 10 percent increase would only be around a penny and that's a joke. Don't even go there with me. One cent added into the general fund would never see the light of day toward alcohol abuse.

A second argument is that the tax would be shouldered by the responsible drinker, thereby making it unfair since it's only the problem drinkers who kill. Allow me to set that one straight: The man who killed Dad was a responsible drinker who had one drink too many. One drink. This one drink impaired his judgment. He had another. And another. Then he drove. The difference between a responsible drinker and a problem drinker is one drink.

A third argument is Alaska would be the highest in the nation for taxing alcohol. The wholesalers conveniently don't mention Alaska has an excise tax because unlike most other states, we don't have a state sales tax which would effectively fund alcohol education, prevention and enforcement.

You can bet MADD will be there to make sure that dime gets spent on those three areas. MADD encourages you to contact your elected officials to vote yes on HB 225. I learned about this bill when I became a victim. Is this how you want to find out about excise taxes? I don't think so. Contact your elected officials before it's too late.

Cindy Cashen is a volunteer with the MADD chapter in Juneau.



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