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Rep. Terese Berceau’s Beer Tax Proposal 2009-10

Rep. Terese Berceau’s Beer Tax Proposal 2009-10. Wisconsin has a serious alcohol problem. We lead the nation in moderate to heavy alcohol consumption among pregnant women We have the highest adult binge-drinking rate We have the second highest college student binge-drinking rate

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Rep. Terese Berceau’s Beer Tax Proposal 2009-10

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  1. Rep. Terese Berceau’s Beer Tax Proposal2009-10

  2. Wisconsin has a serious alcohol problem • We lead the nation in moderate to heavy alcohol consumption among pregnant women • We have the highest adult binge-drinking rate • We have the second highest college student binge-drinking rate • We have the 3rd highest underage drinking rate in the country (26.17% between ages 12-20 over a one month period) • We rank 48th worst in the nationin alcohol-related per capita health care expenses • In Wisconsin, alcohol and drug abuse is the 4th leading cause of death, behind heart disease, cancer and stroke 1) Report on the Findings of the Needs Assessment: Deliverable #3, FASD Prevention Initiative: Wisconsin Department of Health and Family Services, May 13, 2005 2) Wisconsin Epidemiological Profile on Alcohol and Other Drug Use, Wisconsin Department of Health Services, July 2008 3) Megan Twohey. (2005, February 23) “Binge-drinking students follow in adults’ footsteps: [final edition]. Milwaukee Journal Sentinel, p. 01, retrieved April 28, 2009 4) Substance Estimates from the 2004-2006 National Surveys on Drug Use and Health, U.S. Department of Health and Human Services, U.S. Substance Abuse and Mental Health Services Administration, 2007 5)Factbook on State Beer Taxes, Center for Science in the Public Interest: Alcohol Policies Project, July 2004 6)2002 Wisconsin Alcohol Traffic Facts Book, Wisconsin Department of Transportation

  3. We drink and drive … and die • We are tied for 4th (with Louisiana) for the highest percentage of driver fatalities in which blood alcohol concentrations exceed .08 • Only North Dakota, South Carolina and Delaware are worse • We are tied for 5th for the highest percentage of driver fatalities in which blood alcohol concentrations exceed .01 • …and 41% of crash fatalities result from a BAC of .08 or higher Traffic Safety Facts 2007 Data: Alcohol, NHTSA’s National Center for Statistics and Analysis, Washington, DC

  4. Alcohol and Crime in Wisconsin 2007 Violations • 35,659OWIs (Operating While Intoxicated) • 5,057PACs (Prohibited Alcohol Content) • 480OWIs Causing Injury • 38OWIs Negligent Homicide • 97OWIs in a Commercial Vehicle 41,331 Total(including 5 related charges) 2007 Fatalities and Injuries(last year for available statistics) • 337alcohol-relateddriving fatalities • 5,552alcohol-related driving injuries Wisconsin Department of Transportation, Final Year Crash Statistics, 2007

  5. What about underage drinking deaths? The National Safety Board and the Coalition to End Needless Death on our Roadways (a physician group) listed Wisconsin in 2006 among their“Fatal Fifteen”states with the highest underage drinking death rates Wisconsin is among 10 states on the list for the third consecutive year “Ten states make deadly fatal fifteen list for three years straight”, 11/06, END

  6. In 2007, 41,435 Wisconsin teens and adults received publicly funded treatment for alcohol dependency or abuse Dept. of Health Services, Division of Mental Health and Substance Abuse Services, Bureau of Prevention, Treatment and Recovery

  7. However, it is estimated that 457,000 Wisconsin residents who need alcohol treatment are not receiving it Dept. of Health Services, Division of Mental Health and Substance Abuse Services, Bureau of Prevention, Treatment and Recovery

  8. Beer is the alcoholic drink most abused • 60% of all beer is consumed in amounts of five or more drinks per day • It is the drink most commonly consumed by people stopped for impaired driving or involved in alcohol-related crashes • Beer accounts for 81% of all alcohol that is drunk in hazardous amounts in the U.S. 1) Greenfield, T.K. & Rogers, J.D. (1999). “Who drinks most of the alcohol in the U.S.? The policy implications,” Journal of Studies on Alcohol. 60. 2) Rogers, J.D., Greenfield T.K. “Beer drinking accounts for most of the hazardous alcohol consumption reported in the United States,” Journal of Studies on Alcohol. 60(6): 732-9, 1999 3) Insurance Institute for Highway Safety. “Q&A: Alcohol: General.” Arlington, VA: National Highway Insurance Institute for Highway Safety, June 2003

  9. According to the UW Police • 41% of all academic problems stem from alcohol abuse • 28% who drop out of school may do so because of alcohol • 70% of violent behavior (fights, rapes) on campus results from alcohol abuse • 59% of fatal falls are related to alcohol • 50% of all traffic fatalities are related to alcohol • 70% of attempted suicides are alcohol-related http://www.uwpd.wisc.edu/pamphlets/Alcohol.pdf

  10. Alcohol is directly related to rape • 26% of the men who acknowledged committing sexual assault on a date reported being intoxicated at the time of the assault • 21% of the college women who experienced sexual aggression on a date were intoxicated at the time of the assault • 50% of sexual assaults involving college students are associated with alcohol use • 97,000college students were raped or sexually assaulted in 2001 as a result of alcohol use "Acquaintance Rape and Alcohol Consumption on College Campuses," by Antonia Abbey, PhD, Journal of American College Health. Vol. 39, January 1991 “Alcohol-Related Sexual Assault: A Common Problem among College Students” Antonia Abbey, Ph.D, citing Abbey et al. 1996a, 1998; Compenhaver and Brauerholz, 1991; Harrington and Leitenberg, 1994; Presley et al., 1997 “Wasting the Best & Brightest: Substance Abuse at America’s Colleges and Universities” March 2007, CASA

  11. Alcohol is increasingly tied to child abuse and domestic violence • Adult alcohol abuse contributes to 50% of reported instances of marital violence and 35% to 70% of child abuse cases • Another study shows that the percentage of batterers who are under the influence of alcohol when they assault their partners ranges from48% to 87%,with most research indicating a60%to70%rate of alcohol abuse • 92%of domestic abuse assailants reported use of alcohol or other drugs on the day of the assault • An estimated480,000children are mistreated each year by a caretaker with alcohol or other drug problems • Adger H Jr, “Problems of alcohol and other drug use and abuse in adolescents,” J Adolesc Health 1991; 12:606-613 • “The Relationship Between Parental Alcohol or Other Drug Problems & Child Maltreatment,” National Committee to Prevent Child Abuse (312) 663-3520 • Roberts, A. R. (1987). Psychosocial characteristics of batterers: A study of 234 men charged with domestic violence offenses. Journal of Family Violence, 2 (1), 81-93. • Bijur, P.E., M. Kurzon, M.D. Overpeck, and P.C. Scheidt. 1992. “Parental alcohol use, problem drinking and child injuries,” Journal of the American Medical Association 23:3166-3171 • “Collaboration, coordination and cooperation: helping children affected by parental addiction and family violence. New York: Children of Alcoholics Foundation,” Children of Alcoholics Foundation, Inc. 1996

  12. How much beer does Wisconsin consume? • Wisconsin ranks 5th highest per-capita for alcohol consumption from beer • The average Wisconsinite consumes 1.56 gallons of pure ethanol annually from beer • Only Nevada, New Hampshire,Louisiana and Montanarank higher • Wisconsin ranks 4th highest per-capita for alcohol consumption from all alcoholic beverages • On average, Wisconsin residents consume 2.96 gallons of ethanol per person, per year • Beaten only by New Hampshire, Nevada and Delaware Nev National Institute on Alcohol Abuse and Alcoholism, Surveillance Report #85: Apparent Per Capita Alcohol Consumption: National, State, and Regional Trends, 1977-2006, November 2008

  13. Is the beer industry innocent? For 2001 consumer expenditures for alcohol nationally(the last year for available data) • 17.5%went to underage drinking ($22.5 billion) • 20.1%went to adult pathological drinking ($25.8 billion) • 37.8%of alcohol (by cost) was misused or illegally consumed • A 1999 analysis showed that 50.1% (by volume) is misused or illegally consumed ($56.9 billion) • The alcohol industry is financially dependent upon underage and pathological drinking 1) “The Commercial Value of Underage and Pathological Drinking to the Alcohol Industry,” The National Center on Addiction and Substance Abuse at Columbia University, May 2006 2) “Alcohol consumption and expenditures for underage drinking and about excessive drinking,” The National Center on Addiction and Substance Abuse at Columbia University, February 26, 2003

  14. The Berceau Proposal

  15. What does the Berceau proposal mean in terms of the cost of a beer? • The average price of a 12 oz. bottle of domestic beer in Wisconsin is $0.985 • For a bottle of imported beer: $1.20 • For a bottle of craft beer: $1.08 • The Wisconsin beer tax accounts for $0.006 of that price • The Berceau proposal would addonlyto each • A 2.4% increase for a domestic beer • A 2% increase for an imported beer • A 2.2% increase for a craft beer 2.4¢ Scott Stenger, lobbyist for the Miller Brewing Company

  16. What does this mean for the heavy drinker? Under the Current State Beer Tax: If you drink by the end of the week … you will have paid in state tax Under Rep. Berceau’s Proposal: If you drink a six-pack a day… by the end of the week … it will cost you an additional a six-pack a day … 25¢ $1

  17. Beer tax revenue has dwindled • The state beer tax has not been raised since 1969 – the year that Neil Armstrong walked on the Moon • It has lost 83% of its value due to inflation • If adjusted for inflation, beer would be taxed at over $11.62 a barrel, instead of $2 currently • Rep. Berceau’s proposed $8 increase per barrel would raise million annually $40 Factbook on State Beer Taxes, Center for Science in the Public Interest, Alcohol Policies Project, August 2004

  18. How much do we collect? • Wisconsin residents pay about 3.6¢ per six-pack ($2.00 a barrel) • The Wisconsin state beer tax raised $9.62 million in FY2007-08 • It’s estimated to raise only $10 million in FY2008-09 & FY2009-2010 Wisconsin Legislative Fiscal Bureau, Informational Paper #8: Alcohol and Tobacco Taxes, January 2009

  19. Wisconsin’s beer tax in context • Wisconsin has the third lowest beer tax in the nation (6.5¢ per gallon) (Major beer producing state) • Second Lowest: Missouri (6.0¢ per gallon) (headquarters of Anheuser-Busch) • Lowest: Wyoming (1.9¢ per gallon) Wisconsin Legislative Fiscal Bureau, Informational Paper #8: Alcohol and Tobacco Taxes, January 2007

  20. Our neighboring states charge two to three times more • Illinois: 19¢ per gallon • Minnesota: 15¢ • Indiana: 12¢ • Michigan: 20¢ Wisconsin Legislative Fiscal Bureau, Informational Paper #8: Alcohol and Tobacco Taxes, January 2009

  21. Other states charge much more • Alaska: per gallon • Hawaii: • South Carolina: • New Mexico: • Oklahoma: $1.07 93¢ 77¢ 41¢ 40¢ Wisconsin Legislative Fiscal Bureau, Informational Paper #8: Alcohol and Tobacco Taxes, January 2009

  22. Most beer produced in WI is not taxed at all! • Wisconsin beer producers have two major tax breaks: • Beer produced in Wisconsin that is exported elsewhere is exempt from the WI beer tax • Producers that brew less than 300,000 barrels a year, pay only half of the tax on the first 50,000 barrels • Wisconsin produced 12.1 million barrels of beer in 2008 • We exported 9.5 million barrels (78.7%), all from WI taxation • The remaining 2.6 million barrels were taxed, and consumed in-state • So, only 21.3 % of the beer produced in Wisconsin was subject to the WI beer tax • Only 19% was taxed at the 100% rate exempt Wisconsin Department of Revenue, 2009

  23. Most Wisconsin beer producers pay only half of our tax Most Wisconsin beer producers pay only half of our tax • There were 87 Wisconsin Beer Producers in 2008 • 78 were taxed at the 50% beer tax rate • 4 were taxed at a combination of the 100% and 50% rate • 5 were taxed entirely at the 100% rate • The top four producers account for 91% of all revenue from in-state producers Wisconsin Department of Revenue, 2007

  24. Most Wisconsin beer producers pay little in taxes • Between $0-$100 26 breweries • Between $100-$1,000 35 breweries • Between $1,000-$5,000 13 breweries • Between $5,000-$10,000 2 breweries • Between $10,000-$30,000 5 breweries • Between $30,000-$50,000 0 breweries • Between $50,000-$100,000 0 brewery • Between $100,000-$1,000,000 4 breweries • Over $1,000,000 2 brewery (Miller) Wisconsin Department of Revenue, 2007

  25. How does the beer tax compare to other Wisconsin taxes … and their increases?

  26. No increase in 40 years!

  27. QuizHow many six-packs must be sold to produce the same state excise tax revenue generated by one carton of cigarettes? 492 After the most recent cigarette state tax increase to $1.77 per pack of cigarettes

  28. Arguments against increasing the Wisconsin beer tax, and our responses

  29. Argument 1 The beer tax is paid by those who consume beer regardless of their income It is a regressive tax

  30. Our Response: • Allsales taxes, fees and fines are regressive as a matter of practice. Only income and property taxes are consciously progressively structured. For example… • Hunting and fishing licenses are paid by those who hunt and fish,regardless of income • Drivers’ license and license plate fees are paid by those who drive,regardless of income • It is a generally accepted concept of fairness that those who participate in an activity should help shoulder the costs that activity incurs • Are the opponents of the beer tax advocating a major re-write of our tax code to make all taxes, fees and fines progressive? • I don’t think so

  31. Argument 2 Beer is a blue-collar drink The beer tax hits average working people of modest means hardest, because they drink the most beer

  32. A False Our Response: Beer consumption is approximately evenly split across upper and lower income levels BeerSoaksAmerica.org; “Beer Consumption in America, citing Adams Beer Handbook, 2006

  33. In fact, beer is consumed somewhat more by the upper classes • People earning $50,000 or less consume 39% of the regular beer in the U.S. • While those earning $75,000 or more drink 41% of the regular beer • For light and imported beer: lower income people (making $30,000 or less) are 11% to 53% less likely than upper income people to drink these types of beer BeerSoaksAmerica.org; “Beer Consumption in America, citing Adams Beer Handbook, 2006

  34. 60%of regular beer consumers earn incomes of$50,000or more While, Wisconsin’s median household income is only about$45,000 BeerSoaksAmerica.org; “Beer Consumption in America, citing Adams Beer Handbook, 2006 U.S. Census Bureau, 2005

  35. B Our Response: The average drinker will not bear the brunt of a beer tax increase

  36. Beer producers are not so concerned with the “average” drinker They know that most of their revenues come from heavy drinkers price-insensitive

  37. The heaviest drinking 10% of beer drinkers consume a whopping of reported beer consumption 42% Center for Science in the Public Interest: Fact Sheet of Beer Consumption and Taxes, August 2003

  38. of drinkers consume of all beer! 20% 85% Greenfield, T.K. & Rogers, J.D. (1999). “Who drinks most of the alcohol in the U.S.? The policy implications,” Journal of Studies on Alcohol. 60.

  39. The moderate-drinking majority of drinkers consumes, on average, relatively little alcoholand pays a amount of alcohol taxes negligible

  40. Between 1984 & 2009, the CPI growth for all products was about 16% higher than for beer consumed at home and 71% higher than for beer consumed outside of the home US Department of Labor, Bureau of Labor Statistics, Consumer Price Index, 2009

  41. Heavy and addicted drinkers – who account for most of the beer consumption in the U.S. – rightly pay most in beer taxes, since their drinking imposes the greatest cost to society

  42. 2.4¢ If a per bottle tax increase will cause you financial burden …. You have worse problems to deal with than the beer tax

  43. Argument 3 A beer tax will hurt economic development and cost jobs in Wisconsin

  44. Our Response • Claims of job loss are not supported by the evidence • Between 1990 and 2000, beer industry wholesale trade employment by more than 8,000 jobs nationally • Including increases between 1990 and 1992 – a year before and after the last federal beer tax increase! • …an increase that was that proposed by Rep. Berceau rose almost equal to Bureau of Labor Statistics of the U.S. Department of Labor

  45. Beer Lobbyists Tell Us That the Industry Provides Plenty of Jobs …We Don’t Disagree Social Workers Coroners Ambulance Drivers Emergency Medical Technicians Hospital Trauma Teams Tow Truck Drivers Court Commissioners Prison Guards Police Officers AODA Counselors Judges Collection Agencies Insurance Adjusters Jailers Physical Therapists Plastic Surgeons Psychiatrists Marriage Counselors Repossession Agencies Firefighters Auto Body Shops Academic Counselors Bailiffs Funeral Directors

  46. Consider the effects of that federal beer tax increase of 1991 • Economists at the National Bureau of Economic Research estimate that the 1991 increase in the federal beer tax saves more than 600 young lives in alcohol-related crashes each year • In the two years following the increase, syphilis rates fell nearly 40% and gonorrhea rates declined nearly 30%,attributable to the tax Grossman, M., Chaloupka, F. J., Saffer, H., & Laixuthai, A. (1994) “Effects of alcohol price policy on youth: A summary of economic research”. Journal of Research on Adolescence, 4(2): 347-364. Chesson, H., Harrison, P. & Kassler, W.J. (2000). Sex under the influence: The effect of alcohol policy on sexually transmitted disease rates in the United States. Journal of law and Economics. XLIII:215-238.

  47. Argument 4 A beer tax increase will cause businesses to move to more tax-friendly states

  48. Our Response • Historically this just doesn’t hold. Despite Wisconsin’s low beer tax, we have seen the relocation of Schlitz (1981), Pabst (1996) and Miller’s Headquarters (2008) • Wisconsin has the 10th highest number of microbreweries per capita. This is great for Wisconsin jobs! But note that 8 of the states with more microbreweries per capita have higher beer taxes than WI. Once again, this shows that a higher beer tax is not causing breweries to flock to other states with lower taxes. 1)“Beer town no more: Milwaukee Struggles with its image” Daniel LeDuc, Wisconsin State Journal. Madison, Wis.: Dec 9, 1996 2)JUST LIKE OLD TIMES WITH SCHLITZ; "THE BEER THAT MADE MILWAUKEE FAMOUS" IS ON GROCERY SHELVES AND IN TAVERNS IN MILWAUKEE ONCE AGAIN, AND THAT'S BRINGING BACK MEMORIES FOR A LOT OF MILWAUKEEANS. EMILY FREDRIX Associated Press. Wisconsin State Journal. Madison, Wis.: Aug 2, 2008 3) Last call dawns for Miller Brewing; Merger with Coors becomes official TOM DAYKIN. Milwaukee Journal Sentinel. Milwaukee, Wis.: Jul 1, 2008. 4) Brewers Association, Breweries Per Capita 2008 5) Factbook on State Beer Taxes

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