Bar owners riled over liquor tax

Posted: Tuesday, August 03, 2004

The city is "headed for prohibition" with its latest attempt to raise the liquor tax, members of the bar industry said Monday.

"The liquor industry in general is being persecuted wholesale," said Josh Adams, co-owner of The Alaskan Hotel.

Local bar owners are upset because last week the Juneau Assembly announced it may put a proposal on the ballot this October to increase the liquor tax. The tax, subject to voter approval, would go up from 3 cents to 5 cents on the dollar.

The Assembly will meet Aug. 9 to consider putting the liquor tax ordinance on the ballot. A public hearing would be held Aug. 23.

City leaders want a higher tax to pay for alcohol-related crimes that cost the city time and money in the law and police departments, along with the court system.

"Alcohol has a huge impact on the city budget," said Assembly member Marc Wheeler. "The users of alcohol should pay their fair share."

Bar officials say alcohol is a legal product that is being disproportionately taxed compared to other goods.

"The biggest problem is the people who want to preserve this aspect of our culture are not standing up for our rights," Adams said. "I believe we're headed for prohibition."

Talk of a liquor tax increase comes after an Assembly decision earlier this year to ban smoking in all restaurant bars in 2005 and all stand-alone bars in 2008. That will hurt business because many bar patrons smoke, industry officials say.

Liquor is now assessed a 5 percent city sales tax and 3 percent liquor tax. Raising the tax 2 cents would mean all liquor is taxed at 10 cents on the dollar compared to other businesses that would continue to pay half that amount.

"Why is it fair?" asked Jack Tripp Jr., owner of the Imperial Bar. "It's an easy industry to pick on. They call it a sin tax."

Tripp said he will absorb the added 2-cent tax because his fast-paced bar doesn't deal in pennies, nickels and dimes.

"Why do we have to pay more?" Tripp asked. "Why is it always us?"

When told the Assembly wants the money to pay for alcohol-related crime, Tripp replied: "It costs more than the money they already take?"

Each cent of the liquor tax raised about $230,000 this year, or nearly $700,000, City Finance Director Craig Duncan said.

A November 2001 study by the McDowell Group in Juneau estimated the cost of drug and alcohol dependence on the Alaska economy at $614 million in 1999. Alcohol abuse accounted for $453 million and other drug abuse costs were estimated at $161 million.

Costs by category included: $319 million from productivity losses, $146 million from criminal justice and protective services, $123 million from health care, $21 million from traffic crashes and $4 million from public assistance.

Some local patrons said they'd still drink, just not in bars or in Juneau, if the tax goes up.

"Where is the tax benefit going to come from if you put the drinking people out of the bars?" asked Kenny Kirkman, a patron at The Rendezvous bar downtown.

Derrick Barton, 41, works as a logger outside of Ketchikan and comes to Juneau to party, he said. If Juneau raises the tax, he'll drink in another Southeast town, he said.

If the new tax passes, the city may not want to spend the money until legal issues surrounding the tax are resolved, City Attorney John Hartle said.

State law restricts the ability of municipalities to tax alcohol more than other items. The current liquor tax is grandfathered under the law.

• Tara Sidor can be reached at tara.sidor@juneauempire.com



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