It was inevitable, what with the state budget situation and all, that another “let’s increase the sin taxes for additional revenue” movement came along. What’s interesting is, the initiative measure doesn’t strictly spell out that it’s only for revenue, but rather to increase the funding to the California Department of Alcohol and Drug Programs. The co-authors are a couple named Josie and Kent Whitney, who state that, “alcohol-related problems cost Californians an estimated $38.4 billion annually, including the costs of illness and injury, the criminal justice system, lost productivity, impacts on the welfare system, trauma and emergency care, and the foster care system.” That’s quite a mouthful and probably only the dollar amount could really be argued. A nutshell version of the excise tax increases are as follows: a six-pack of beer jumps from $0.11 to $6.08; a 750 mL bottle of wine from $0.04 to $5.11, and a bottle of distilled spirits from $0.65 to $17.57. Remember this is state taxes, and doesn’t include existing federal taxes.
The size of these increases is nothing short of ludicrous, and that might work in favor of a defeat because they’re so crazy. Most realistic thinkers can agree that alcohol taxes are very low compared to almost anywhere else, and we perhaps should pay a larger share of the tax burden, but certainly not carry it all. The last state alcohol tax increase was in 1992, and I can remember the hue and cry at the time for what was really a small increase. We also can remember the “nickel a drink” proposal a few years back—boy does that look cheap now! One would like to think that the average Californian would have more brains than to fall into this neo-prohibition thought process, but certainly stranger things have happened. With drunk driving issues and lawsuits appearing almost daily in the media, it doesn’t take much to turn the tide.
I’m not completely sure how accurate the figures that appear in the initiative are, but they do make one stop and think. Here’s a brief summary.
The direct use of alcohol costs state and county governments $8.3 billion per year while only generating less than $1 billion per year. Second, beer accounts for 80 percent of the alcohol consumption, is mostly consumed by binge drinkers, and 67 percent of binge drinkers are under 18. There are 97,000 college-aged women who are raped each year in instances involving alcohol. Alcohol accounts for approximately 5,000 fetal alcohol syndrome babies per year, and each costs more than $2 million to treat. One person dies, and 533 incidents of violent crime happen every hour due to alcohol consumption. Finally, 67 percent of all alcohol sold is purchased by only 11 percent of the population. I sure must have some strange friends then, because I’m not sure I know more than a half-dozen people who don’t buy some form of alcohol.
From a strictly statistical point of view, these really are some frightening numbers. But I really have trouble believing that only 11 percent of the population buys two-thirds of all alcohol sold. You’d have a hard time believing that just looking at the wine, beer and liquor displays and ads that are all around us in supermarkets, drugstores and discount liquor stores, as well as printed media ads.
The initiative spells out how the percentages of the money collected will be allocated—certainly all very worthy and needed causes. Now the big question is whether the average Californian will buy all of this. Only 433,971 signatures are needed by August 23, 2010, to get this on the ballot—and that’s frightening, because it’s such a small number.
Obviously, the alcohol industry will be up in arms and the battle will be on. It’s hard to ignore the fact that we in the wine industry (the higher end) might well be wearing blinders. Not many people are going to binge drink or become alcoholics on our $20 to $100 wines. We might need to remember that many of the products that are part of alcohol’s image and problem stems from our very own industry. Mad Dog 20-20, Red Lady 21, Thunderbird, Silver Satin and a lot of the newer “beverage wines” are cash cows of our big boy leaders, and they’re the heart of the “wino” problem. We’ve spent nearly a lifetime trying to live down the brown paper bag image, but we still continue to produce it. It’s almost as if we’re really a two-headed monster but keep one head in the sand.
Do I think this initiative will pass? No. But I think it stands a good chance of getting on the ballot. Just the anti-alcohol religious groups are enough to get the signatures. If that happens, then it’s going to get expensive and we’re all going to end up paying for it. You know, it just dawned on me that maybe the high-end people won’t care very much one way or the other, since anybody who will pay $50+ for a bottle won’t object to a $55+ price tag. Heck, what’s another $5 since I’m already paying too much? A few years ago, in another tax battle, the wine industry tried to distance itself from the beer and hard liquor boys when it was advertized that a glass of wine, a can of beer, and a highball were all the same. Will that happen again?
If this battle materializes, it’ll come at a time when our industry can least afford an expensive fight. A recent Napa winery newsletter proclaimed that at least 15 wineries are already in receivership, and there will be more to come. One realtor told me that at least a dozen Sonoma County wineries have contacted him stating an interest in being bought—but don’t tell anyone, since we don’t want people to really know. Sounds real, but it sure puts the realtor in a bind.
OK off to your homework, and stock up in case the loonies win!
