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Increased beer tax puts burden for service where it belongs

in Ray Peterson/Column
2611

By R. Ray Peterson

Recently, the Legislature’s Labor and health Committee voted down a proposed increase to the malt beverage tax.  This tax has not been increased since 1935!  

The tax on malt beverage in Wyoming is still at 2 cents per gallon or less than two-tenths of a cent per 12 oz. can.  Wyoming ranks 50th — last of all the states — with the lowest tax on malt beverage products.  All other states around us tax beer at an average of 20 per gallon.  

So why are we so reluctant to raise this tax?   There seems to be a disconnect from the costs incurred by the state from this market and what we charge in tax to help meet those costs.  

Here are some figures that might surprise many.  The direct cost that our state incurs from the abuse of alcohol is projected at around $27.6 million, (WYSAC 2010 study). 

The current tax on beer at 2 cents per gallon generates about $265,000 annually.  This leaves the state having to come up with $27.3 million to pay for the services we provide that are associated with alcohol abuse, for treatment centers, law enforcement, court costs, emergency services and correctional facilities.  Indirect costs, such as lost productivity, associated with alcohol abuse was estimated to be in the area of $800 million dollars.

The arguments against raising the beer tax in the past have been that it would only raise $2.3 million in additional revenue, which would not come close to meeting the $27 million costs to the state.  Another was that we would have many of our citizens driving to surrounding states to buy their beer and that it would put many of our beer retailers out of business.

First, if the tax was comparable to surrounding states, such as the 20 cents per gallon amount, there would be no savings by driving to another state to make your purchase.  The tax would need to be competitive with surrounding states eliminating that concern.  And second, $24 million in subsidies is better than $27.3 million.  

We seem to not have a problem with raising the tobacco tax over the years to help meet the costs associated with tobacco use as well as persuade folks to reconsider the health risks, but alcohol seems to be thought of differently.  Perhaps we don’t really associate these estimated costs to the abuse of alcohol.  Or maybe that alcohol abuse is not considered to be a health risk.  

What ever the disconnect is, or has been, the end result is millions of dollars over the years have been spent from the general fund to cover the costs that are directly related to alcohol abuse.        

This question should be asked if this money could be spent or used for things that could serve our state better?  These funds could be used for local government distributions, K-12 education funding, senior citizen centers, libraries, streets, bridges, recreation centers, ball fields, parks, tourism, economic development and on and on.   

For the last 84 years, Wyoming has chosen to subsidize the beer drinkers with a portion of the excess revenues we’ve enjoyed.  Now those excess revenues are diminishing and yet, we still can’t quite bring ourselves to the reality that services cost money, and now, with money that we don’t have.   But, for some odd reason, we take pride that we have the lowest beer tax in the nation.  Perhaps we have some that are looking at this as economic development by attracting more drinkers to our state by keeping the tax on beer low.  We even had serious attempts to do away with the sales tax on beer completely because it just did not generate any large revenue.  I don’t think I need to look up the definition of stupid.  

But not to worry folks, a healthy dose of reality is knocking at our door in the Cowboy State and our leaders will be forced to come to grips of making every dollar stretch. You can bet on one thing as we keep the tax on beer the lowest in the nation, that the costs that we all incur from the effects of alcohol will continue to increase, making the figures even worse with each passing year.  

For me, while I served, it was a matter of being practical with our state’s revenue as well as the fairness of the issue.  I made two attempts at raising the beer tax in Wyoming and was overwhelmingly defeated both times in the house, where all taxing bills must start.  I compare this issue with how we fund our highways.  Those that use our highways pay a tax for having a vehicle in licensing, registration, sales tax and fuel tax.  With the beer industry and our drinkers, they want nothing to do with helping pay for the expenses that are created by them.  Same old story: Let someone else pay for my expenses both now and in the future.  

My final thought on the subject.  I would be OK with eliminating the malt beverage tax and the alcohol tax in Wyoming as long as we eliminate all services that are provided for those who choose to use or abuse alcohol.  Wait, what?  How cold is that?  Funny how drinkers don’t recognize the costs associated with drinking but how dare we cut or eliminate the services they receive when they’ve had a bit too much to drink.  

When will we recognize that everything has a cost and who better to meet that expense than those that create the cost in the first place.  Now it should be understood that I don’t have a problem with the drinkers of Wyoming.  My problem rests with the state’s failure to properly tax those who create the tax burden.  As I served as the Senate Revenue Committee Chairman, I always tried to be fair and equitable in sharing the tax burden, as we considered each tax proposal.  In this particular case, it certainly is not fair to under-tax the users while expecting others to pick up the tab.  The one comforting thought I have in this matter is that state revenues are shrinking and as the money for budgets disappear, we will be forced into making these so-called tough decisions that we have put off 84 years.

Cheers everyone!

R.Ray Peterson is a Cowley resident who served as a state senator from 2005 to 2018.

Proposed increase in alcohol tax rejected by committee

in News/Taxes/Food and Beverage
alcohol tax
2339

By Ellen Fike, Cowboy State Daily

A bill that would have doubled the alcohol taxes in Wyoming was rejected on Wednesday by a legislative committee.

The bill lost by one vote, with seven members of the Joint Labor, Health and Social Services Committee voting against it and six members voting to move it forward to the full Legislature.

The bill considered by the committee during its meeting in Cheyenne would have doubled the excise tax on alcohol — from three quarters of one cent to 1.5 cents per 100 milliliters of wine, from 2.5 cents to five cents per 100 milliliters of spirits and from one-half cent to one cent per liter of beer — for three years. 

The money raised from the increase, estimated at $1.9 million a year would have been split, with half going to the Department of Health to fund behavioral programs that provide mental health and substance use treatment. The other half would have been used by the Department of Corrections for the purpose of providing mental health and substance use treatment for parolees and people who have been released from an institution. 

It would have been the first increase in alcohol taxes since the end of Prohibition in 1933.

Even with the increase, Wyoming’s alcohol taxes still would have been the lowest in the nation, Rep. Mike Yin,  D-Jackson, pointed out during the meeting. 

The discussion drew passionate pleas from both elected officials and members of the public, with Sen. Charles Scott, R-Casper, being one of the major proponents of moving the bill forward. 

“We’ve identified a real need for substance abuse treatment for the public and our inmates,” he said. “By identifying that need, we should fund it.”

According to a University of Wyoming study, alcohol abuse cost the state more than $840 million in 2010 due to lost productivity, health care costs and criminal activity.

However, some legislators simply did not support any tax increase.

Rep. Clarence Styvar, R-Cheyenne, admitted before the vote even took place that he would say “nay” to the proposed bill. 

“We don’t need to be taxing one group of people,” he said. “I said it last year when they tried to raise the tobacco prices. I’ve said it before and I’ll say it again: ‘No new taxes.’”

Others expressed concern that the tax income, once raised, might be used for purposes other than what were intended.

Mike Moser, executive director for the Wyoming State Liquor Association, argued other resources are available for those suffering from substance abuse and mental health problems.

“We’re asking responsible consumers of alcohol, the vast majority, to be forced to pay for substance abuse when so many of these cases don’t have anything to do with alcohol and mental health programs,” he said. “This isn’t apples and oranges. I believe we’re targeting a select, responsible few to cover the entire gamut.”

Moser also argued that the tax increase could hurt alcohol sales to “price-sensitive” Wyoming consumers and said those along Wyoming’s southern border might drive to Colorado to purchase their alcohol.

Wyoming is one of 17 “control states,” meaning that the state has a monopoly over the wholesaling or retailing of some or all alcoholic beverages.

Sen. Anthony Bouchard, R-Cheyenne, said the bill’s supporters seemed to imply that alcohol was bad, yet the state has a monopoly on selling it.

“We’re not saying alcohol is inherently bad,” Scott replied. “We’re saying that it has a risk and somebody has to pay the price of it. That risk should be taxed.” 

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