Pitch for variable beer tax falls flat in committee

Published: Wednesday, Oct. 16 2013 5:21 p.m. MDT

Lawmakers took no action Wednesday on a proposal that would levy tax on beer depending on the current consumer price index.

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SALT LAKE CITY — Incresaing the tax on beer sold in the Beehive State is "much more of a health issue than a tax issue," according to one Utah lawmaker proposing the action.

Rep. Jack Draxler, R-Logan, believes the increased cost for the product might serve as a deterrent to young people, as well as people who drink too much, but would also fund much-needed prevention, intervention and treatment programs "before laws are violated."

"The potential tax revenue is fairly insignificant compared to the human costs of underage drinking and binge drinking," he said.

Draxler is proposing a tax on beer that would fluctuate with the consumer price index, but would not exceed 4 percent.The current tax on a 31-gallon barrel of beer in Utah is $12.80, a rate that hasn't changed in a decade and is sometimes eroded by inflation. Draxler said the per serving increase contained in his proposal would be "miniscule" but would help cut down on societal impacts caused by underage and binge drinking.

"We're talking about families. We're talking about DUI. We're talking about lost productivity in the work place. We're talking about diseases and abuse that often occur (alongside drinking)," he said.

Sen. Todd Weiler, R-Woods Cross, said he doesn't agree with any tax increase, but that if the beer tax was justified, so would a tax on any unhealthy habit, including Big Macs and Slurpees, "to guard against underage obesity."

"There are infinite number of good causes … and all would justify some type of tax increase," Weiler said. "Is it our job as policymaker to pick winners and losers in terms of which societal harms will get tax increases or not."

Industry representatives, Draxler said, have declined to work with him on the proposal, stating that Utah's beer tax is already higher than in surrounding states, which might send drinkers scrambling across the border for purchases.

"The price of gas will be several times the tax increase, even for a few miles," Draxler said. "There is no way consumers are going to drive any distance to only buy beer. They may do it when they're also buying cigarettes, fireworks or lottery tickets, but they will not do it solely for beer."

Had the tax been in effect in 2012, when the consumer price index was at 2.9 percent, the increase would have been 37 cents on a barrel of beer.

Public health research reveals that increasing alcohol tax correlates with decreases in disease, crime and violence, said Dr. David Jernigan, director of the Center on Alcohol Marketing and Youth, at Johns Hopkins Bloomberg School of Health. He told members of the Utah Health and Human Services Interim Committee that evidence also suggests that price plays a key part in how much people drink.

"Alcohol is not an ordinary product," Jernigan said, adding that it is responsible for 80,000 deaths a year in the United States. Alcohol, he said, is the third-leading cause of death, associated with killing 419 Utahns a year, 32 of those under age 21.

Though Utah has one of the lowest alcohol consumption rates in the country, alcohol-related issues impose nearly $1.5 million in economic costs, Jernigan said.

Also, he said, "if people do drink in Utah, they tend to drink quite heavily."

Available treatment programs in the state are nearly maxed out, said Brent Kelsey, director of the state's division of substance abuse and mental health. He said that 63 percent of clients served by the division are treated for alcohol dependence, which is the leading drug of choice in the state.

"The reality is, alcohol has more impact on our communities than any other drug," Kelsey said, adding that programs need to be available throughout the state and additional revenues would help to accomplish that.

Utah Beer Wholesalers Association president Jim Olsen said any increase in beer tax would send consumers to purchase outside of Utah. Utah, he said, already has one of the highest beer taxes — 14th in the country — with its imposed 41 cents per gallon. Neighboring Wyoming boast the nation's lowest beer tax with 2 cents per gallon.

He said 75 percent of Utahns live within an hour drive of Evanston, Wyo.

The committee did not act on Draxler's proposal Wednesday. Draxler said that after Wednesday's robust debate, he may revive the issue in the upcoming general session.

Email: wleonard@deseretnews.com, Twitter: wendyleonards

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