The Beer Tap: Beer Tax Increases?

Last night I was watching the news and I heard that a proposal was on the table to raise beer taxes in the state of Wisconsin. I have seen a number of stories on blogs about similar proposals in other states, but since I live here I paid more attention to this story. After all, this is the state with the "Brew City" where beer reigns supreme. How could they even think this would be accepted by the people? I went to the Milwaukee Journal Sentinel to get more details and here is some of what they had to say:

'Two Democratic legislators today vowed to try again to raise the $2-per-barrel beer tax, which has been unchanged for 38 years, despite a warning they are taking on a "sacred Wisconsin beverage."

"I am not predicting it's going to pass," Democratic Rep. Terese Berceau of Madison said of her proposal to boost the $2 tax to $10 per barrel to fight drunken driving and treat alcohol addiction. "I'm kind of fooling around with holy water here."

Her beer-tax increase would raise the tax on a six-pack from 3.6-cents to 18-cents. Overall, it would cost beer drinkers between $40 million and $48 million more a year, she said.

The Assembly leader of her own party has panned her proposal, however.

Senate President Fred Risser (D-Madison) defended the increase, noting it essentially was indexing the beer tax for inflation since its last hike 38 tears ago. In 1969, Risser voted to raise the tax from $1 per barrel to $2, and he said none of the predictions then that it would devastate the state's economy came true.
Wisconsin's $2-per-barrel tax is third lowest in the nation, behind the 59-cent levy in Wyoming and the $1.86 tax in Missouri, home of Budweiser. Legislators said the highest beer tax in the nation is $33.17 per barrel in Alaska.'

The proposed increase would equate to a 3 cent increase per bottle. Its hard to believe that any retailer would not pass on that kind of increase to the consumer even if in stages. Why the desired increase? To help fund programs to fight drunk driving and alcohol addiction. What?!?! I am not saying that these are not important issues. I just think that this is the wrong way to fund programs to address them. Many people throughout the US are able to drink responsibly and should not be forced to fund programs for those who cannot. Why punish everyone who is able to handle alcohol consumption responsibly? Something tells me the amount of money needed to make a difference with these programs could easily be worked into the state budget without the tax. Plus there is a lot that can be done through education by parents at home which is absolutely free. Parents can have a large influence on how their kids view alcohol which I believe will translate into healthier drinking behaviors once they reach the legal drinking age.

In the end I do not think the tax will pass, and it looks like there are groups ready to help fight (from the Capital Times):

Scott Stenger, lobbyist for the Wisconsin Tavern League, doesn't think the proposal will generate a lot of support in the Legislature. "Part of the reason we have a low beer tax is because of the jobs generated by the beer wholesalers and retailers," he said. "Wisconsin is unique compared to most other states in that our economy is really intertwined with the brewing industry. More bars per capita generate jobs, income and taxes."

"To think that raising the tax five-fold won't negatively impact that just isn't accurate," he added.

I'll add in another argument as well...excise taxes are regressive and unfairly tax the poor and lower middle class. As a percent of income, the poor and lower middle class end up paying a heavier tax burden. The graph you see here shows the break down of taxes by income level including the effects of both property and excise taxes. Just in case you need some Economics 101 to help convince you that higher beer taxes are the wrong way to go.