Iowa needs a higher, not lower, tax on beer in new year

Tuesday
Jan 2, 2018 at 9:12 PM Jan 2, 2018 at 9:12 PM

This year, you'll be paying less tax to tipple.

The new tax law passed by Congress and signed by President Donald Trump will cut excise taxes on beer, wine and distilled spirits during the next two years. It's especially generous for craft brewers, cutting the federal excise tax from $7 to $3.50 per barrel.

Will you celebrate with another drink? That's the problem.

If anything, taxes on alcohol should be going up, not down. No one likes paying more. But shouldn't drinkers pay for the social and economic costs caused by their drug of choice?

Those costs are high. Excessive alcohol use already leads to approximately 88,000 deaths a year — the third leading cause of preventable death (behind tobacco and poor diet and physical inactivity). In addition, drinking causes economic costs related to crime, domestic violence, injuries, disease and other problems.

Adam Looney, a senior fellow at the Brookings Institute, estimates the federal tax cut would cause between 280 and 660 additional motor vehicle deaths a year and about 1,550 total alcohol-related deaths annually from all causes.

Looney argues given the negative impacts of alcohol use, "the total local, state and federal tax on alcohol should be roughly four times higher than it is now, and certainly not lower."

Iowa, then, could lead the way by increasing beer taxes.

Iowans pay a beer excise tax of 19 cents a gallon — which is a little more than a dime a six-pack. The tax was last raised in 1986.

Thirty states have higher beer taxes. Iowa's is less than Minnesota, Nebraska, Illinois and the Dakotas. Tennessee has the highest beer tax, at $1.29 a gallon.

The great thing about alcohol taxes is if you don't use, you don't pay. And no, not everyone drinks. About 56 percent of Iowans 12 years of age or older had used alcohol in the last month, and about 25 percent had engaged in binge drinking (defined as four to five drinks in one setting), according to a 2016 Iowa Department of Public Health report.

How high should Iowa's beer tax be? The Centers for Disease Control estimates in Iowa, the costs of excessive drinking are $1.93 billion, or $1.59 per drink. Iowa's costs are high in part because its high rate of binge drinking; Iowa is tied for fourth nationally for the prevalence of binge drinking among adults.

The Alliance of Coalitions for Change, a group of Iowa organizations focused on substance abuse, recommends raising the beer tax 54 cents a gallon, to 73 cents. That works out to an increase of about a nickel a serving. It would raise an additional $40 million a year, based on the 73.8 million gallons of beer sold last year.

In 2010, the Governor's Office of Drug Control Policy made a similar proposal and advocated using the extra money to create a competitive grant program for prevention, treatment and law enforcement — areas that are lacking resources.

Now, the tax revenue goes into the state's general fund. A portion collected from native brewers goes to the Iowa Economic Development Authority's Beer and Wine Promotion Board. So essentially, it goes toward promoting alcohol use.

Studies have shown consumers respond to higher alcohol prices by reducing consumption. It's what happened the last time federal alcohol excise taxes were raised, in 1991. Alcohol-related deaths fell as result, according to a National Bureau of Economic Research study.

Maryland increased its alcohol taxes in 2011, and alcohol-related crashes have dropped by 6 percent, and even more so among drivers age 15 to 34.

Iowans are drinking less beer overall, but the market for local craft brews continues to grow.

In fiscal year 2017, Iowans drank 73.8 million gallons of beer, a decrease of 2.01 percent from 2016.

The "native beer" portion of the market is still tiny — less than 1 percent, or 615,451 gallons. That's an increase of 9.72 percent over 2016.

In 2015, the Legislature changed the definition of beer to include high-alcohol brews. Those double India pale ales and other varieties can reach, by law, 15 percent of alcohol by volume but are taxed at the same rate: 19 cents a gallon. In contrast, Iowa's wine tax is $1.75 a gallon.

So why did Congress lower taxes on alcohol?

Because the alcohol industry has been lobbying for such cuts for years. And the D.C. swamp is brimming with booze money.

In Iowa, we can restore some balance to such tipsy thinking.

 

 

Des Moines Register

Tuesday
Jan 2, 2018 at 9:12 PM Jan 2, 2018 at 9:12 PM

This year, you'll be paying less tax to tipple.

The new tax law passed by Congress and signed by President Donald Trump will cut excise taxes on beer, wine and distilled spirits during the next two years. It's especially generous for craft brewers, cutting the federal excise tax from $7 to $3.50 per barrel.

Will you celebrate with another drink? That's the problem.

If anything, taxes on alcohol should be going up, not down. No one likes paying more. But shouldn't drinkers pay for the social and economic costs caused by their drug of choice?

Those costs are high. Excessive alcohol use already leads to approximately 88,000 deaths a year — the third leading cause of preventable death (behind tobacco and poor diet and physical inactivity). In addition, drinking causes economic costs related to crime, domestic violence, injuries, disease and other problems.

Adam Looney, a senior fellow at the Brookings Institute, estimates the federal tax cut would cause between 280 and 660 additional motor vehicle deaths a year and about 1,550 total alcohol-related deaths annually from all causes.

Looney argues given the negative impacts of alcohol use, "the total local, state and federal tax on alcohol should be roughly four times higher than it is now, and certainly not lower."

Iowa, then, could lead the way by increasing beer taxes.

Iowans pay a beer excise tax of 19 cents a gallon — which is a little more than a dime a six-pack. The tax was last raised in 1986.

Thirty states have higher beer taxes. Iowa's is less than Minnesota, Nebraska, Illinois and the Dakotas. Tennessee has the highest beer tax, at $1.29 a gallon.

The great thing about alcohol taxes is if you don't use, you don't pay. And no, not everyone drinks. About 56 percent of Iowans 12 years of age or older had used alcohol in the last month, and about 25 percent had engaged in binge drinking (defined as four to five drinks in one setting), according to a 2016 Iowa Department of Public Health report.

How high should Iowa's beer tax be? The Centers for Disease Control estimates in Iowa, the costs of excessive drinking are $1.93 billion, or $1.59 per drink. Iowa's costs are high in part because its high rate of binge drinking; Iowa is tied for fourth nationally for the prevalence of binge drinking among adults.

The Alliance of Coalitions for Change, a group of Iowa organizations focused on substance abuse, recommends raising the beer tax 54 cents a gallon, to 73 cents. That works out to an increase of about a nickel a serving. It would raise an additional $40 million a year, based on the 73.8 million gallons of beer sold last year.

In 2010, the Governor's Office of Drug Control Policy made a similar proposal and advocated using the extra money to create a competitive grant program for prevention, treatment and law enforcement — areas that are lacking resources.

Now, the tax revenue goes into the state's general fund. A portion collected from native brewers goes to the Iowa Economic Development Authority's Beer and Wine Promotion Board. So essentially, it goes toward promoting alcohol use.

Studies have shown consumers respond to higher alcohol prices by reducing consumption. It's what happened the last time federal alcohol excise taxes were raised, in 1991. Alcohol-related deaths fell as result, according to a National Bureau of Economic Research study.

Maryland increased its alcohol taxes in 2011, and alcohol-related crashes have dropped by 6 percent, and even more so among drivers age 15 to 34.

Iowans are drinking less beer overall, but the market for local craft brews continues to grow.

In fiscal year 2017, Iowans drank 73.8 million gallons of beer, a decrease of 2.01 percent from 2016.

The "native beer" portion of the market is still tiny — less than 1 percent, or 615,451 gallons. That's an increase of 9.72 percent over 2016.

In 2015, the Legislature changed the definition of beer to include high-alcohol brews. Those double India pale ales and other varieties can reach, by law, 15 percent of alcohol by volume but are taxed at the same rate: 19 cents a gallon. In contrast, Iowa's wine tax is $1.75 a gallon.

So why did Congress lower taxes on alcohol?

Because the alcohol industry has been lobbying for such cuts for years. And the D.C. swamp is brimming with booze money.

In Iowa, we can restore some balance to such tipsy thinking.

 

 

Des Moines Register

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