It isn’t often that we get to praise politicians, but cheers to San Francisco Mayor Gavin Newsom who vowed to veto plans for an increased alcohol tax. The tax “would add about 3 cents to a 12-ounce bottle of beer, 4.5 cents to a 6-ounce glass of wine and 3.5 cents to a drink containing 1.5 ounces of hard liquor.”
First, Newsom is right. This proposed tax is bad for the city and the state’s economy.
California’s wine and alcohol industry is a healthy and vital parts of the state’s economy. This, unfortunately, means it is a prime target for politicians who would rather raise taxes than cut spending. But, while the proposed tax may temporarily fill the coffers, it will result in those wholesalers and distributors charging restaurants, vineyards, and breweries and ultimately, consumers more.
This will result in fewer establishments, fewer jobs, less tax revenue for the state in the long-run.
Wine and beer production provide the U.S. with over 2 million jobs and represent around $60 billion in taxable wages. In California, a state known for its wine production, the stakes are particularly high. The wine industry in California provides tax revenue (about $15 billion in state and federal taxes) as well as bringing in tourists (about 20 million a year) who pour money into other parts of the economy.
The effects of increased taxes on wholesalers and distributors will ripple through the entire industry.
Second, if they charge for the harm alcohol does, are they going to pay for the benefits it also provides?
Alcoholic beverages have long been demonized in this country for the “social ills” associated with those who abuse the product. However, there are just as many if not more positive effects of alcoholic beverages that most do not consider when choosing to apply discriminatory taxes to the industry. Moderate alcohol consumption is widely associated with decreased risks of various age-related medical problems such as coronary heart disease, stroke, cancer, and cognitive disorders like dementia and Alzheimer’s disease, and a new study indicates that alcohol consumers have lower risk of rheumatoid arthritis.
Studies also show that social interaction is more important to ones health than quitting smoking or losing weight. While it isn’t a requirement, much of modern social interraction is organized around the consumption of alcohol: drinks after work, dance clubs, football games and beer, a backyard barbeque. Alcohol isn’t necessary for social interaction, but there’s a reason they call it the social lubricant.
Whether the net effects of alcohol consumption are negative or positive, it shouldn’t be the government’s role to apply discriminating taxes one industry because it deems the effects “undesirable.”