Is it time for California to finally raise alcohol taxes?
By any measure, California is a high-tax state, proper up there with New York, New Jersey and Massachusetts.
Our private earnings and gross sales tax charges are close to the highest and regardless of Proposition 13, California’s iconic property tax charge restrict, Californians’ property tax payments are comparatively excessive, because of our extraordinarily excessive housing and industrial actual property values.
There’s, nonetheless, a notable exception – California’s minimal taxes on alcoholic drinks.
California ranks among the many lowest states in taxing distilled spirits (whiskey, vodka, tequila, and so forth.), wine and beer.
As an illustration, our distilled spirits tax charge, $3.30 a gallon, stands in sharp distinction to different states, together with Washington at $32.52 and Oregon at $21.98. Only some states are decrease, akin to Arizona at $3 and Texas at $2.40, in line with a compilation by the Tax Basis.
The Tax Basis additionally charges our beer tax, 20 cents a gallon, as thirtieth highest, and our wine tax, additionally 20 cents a gallon, as forty fifth and really near the underside.
Gov. Gavin Newsom’s newest funds expects alcohol taxes to generate simply $440 million subsequent yr, a minuscule share of the $232.4 billion the state expects to gather from taxpayers of all stripes.
Why are the state’s alcohol taxes so low? Credit score – or blame – Artie Samish, the legendary lobbyist for the liquor business, and different curiosity teams through the pre- and post-World Battle II period.
Samish was so highly effective and efficient in defending his purchasers’ pursuits that he even posed with a ventriloquist’s dummy on his lap, one he dubbed “Mr. Legislature,” as he was being interviewed by a author.
Samish protected the liquor business by getting the Legislature to enact so-called “honest commerce legal guidelines” that locked liquor costs into legislation and in addition to impose minimal taxes on liquor gross sales.
Though Samish is lengthy gone, having been convicted on federal expenses and died in 1974, the low liquor taxes he lodged into legislation stay largely intact.
This yr, nonetheless, a drive is being mounted to boost these taxes, not solely to reinforce the state’s revenues because it faces deficits however to offset the heavy prices of alcohol-related medical points, together with deaths.
A current report by the California Division of Public Well being discovered that from 2020-21 a median of 19,335 Californians died every year “on account of extreme alcohol use,” with a median 25-plus years of life misplaced for every untimely loss of life. Practically two-thirds of the deaths resulted from alcohol-enhanced illnesses whereas the rest had been from auto crashes, crimes and different violent acts. The deaths throughout that interval had been 20% larger than within the previous 2018-19 interval.
Citing that report and different knowledge, San Rafael-based Alcohol Justice is asking Newsom to double alcohol taxes in his revised 2023-24 funds.
“Alcohol excise taxes in California haven’t modified because the early Nineties, and are a set determine – which means they lose worth with time,” the group instructed Newsom in a letter this week. “With the regular march of inflation, the present CA excise tax charge returns 48 cents on the {dollars} in comparison with its unique worth.
“The (Facilities for Illness Management and Prevention) estimates that alcohol-related harms price the state $14.47 billion yearly,” the letter continues. “Presently, California alcohol taxes solely recoup 16% of these prices.”
Alcohol Justice makes a robust case, significantly in highlighting the corrosive results of inflation. Nonetheless, even with out Samish, the state’s liquor business nonetheless enjoys heavy clout within the Capitol and persuading Newsom to take up the trigger might be troublesome since he owns a winery and sells alcohol by his PlumpJack wine outlets and eating places.
Dan Walters is a CalMatters columnist.
