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Rep. Terese Berceau’s Beer Tax Proposal 2007

Rep. Terese Berceau’s Beer Tax Proposal 2007 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 2007

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  1. Rep. Terese Berceau’s Beer Tax Proposal2007

  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 highest underage drinking rate in the country (39.5% between ages 12-20 over a 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 Report on the Findings of the Needs Assessment: Deliverable #3, FASD Prevention Initiative: Wisconsin Department of Health and Family Services, May 13, 2005 “Wisconsin leads in binge drinking,” The Chicago Tribune, Associated Press, February 23, 2005, citing a 2005 Harvard School of Public Health and the U.S. Centers for Disease Control and Prevention study U.S. Substance Abuse and Mental Health Services Administration, 2007 Factbook on State Beer Taxes, Center for Science in the Public Interest: Alcohol Policies Project, July 2004 2001 Wisconsin Alcohol Traffic Facts Book, Wisconsin Department of Transportation

  3. We drink and drive … and die • We are tied for 2nd(with Delaware) for the highest percentage of driver fatalities in which blood alcohol concentrations exceed .08 • Only Montana is worse • We are tied for 5th for the highest percentage of driver fatalities in which blood alcohol concentrations exceed .01 Traffic Safety Facts 2005 Data: Alcohol, NHTSA’s National Center for Statistics and Analysis, Washington, DC

  4. Alcohol and Crime in Wisconsin 2006 Violations • 35,259OWIs (Operating While Intoxicated) • 8,546PACs (Prohibited Alcohol Content) • 456OWIs Causing Injury • 29OWIs Negligent Homicide • 99OWIs in a Commercial Vehicle 44,394 Total(including 5 related charges) • 37¢ out of every dollar of an alcohol citation is not collected 2005 Fatalities and Injuries (last year for available statistics) • 369alcohol-relateddriving fatalities • 5,992alcohol-related driving injuries Alcohol was related to the crimes of about half our 22,000 prisoners 70%of our22,000prisoners require alcohol or other substance abuse treatment Wisconsin Department of Transportation, 2007 Wisconsin Department of Corrections, 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

  6. In 2005, almost 63,300 Wisconsin residents received publicly funded substance abuse treatment ― the great majority for alcohol abuse Wisconsin Department of Health and Family Services, 2007

  7. Beer is the alcoholic drink most abused • 60% of all beer is consumed in amounts of five or more drinks per day • Beer is the drink of choice in most cases of heavy drinking, binge drinking, drunk driving and underage drinking • 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. 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. 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 Insurance Institute for Highway Safety. “Q&A: Alcohol: General.” Arlington, VA: National Highway Insurance Institute for Highway Safety, June 2003

  8. 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

  9. 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 • 4.7% of college women report being raped • 72% of the victims experienced rape while intoxicated "Acquaintance Rape and Alcohol Consumption on College Campuses," by Antonia Abbey, PhD, Journal of American College Health. Vol. 39, January 1991 “Correlates of Rape while Intoxicated in a National Sample of College Women,” J. Stud. Alcohol 65: 37-45, 2004

  10. 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

  11. How much beer does Wisconsin consume? 4th • Wisconsin ranks highest per-capita for alcohol consumption from beer • The average Wisconsinite consumes 1.52 gallons of pure ethanol annually from beer • Only ,andrank higher • Wisconsin ranks highest per-capita for alcohol consumption from all alcoholic beverages • Beaten only byand Montana New Hampshire Nevada 3rd NewHampshire Nevada National Institute on Alcohol Abuse and Alcoholism, Surveillance Report #78: Apparent Per Capita Alcohol Consumption: National, State, and Regional Trends, 1977-2004, August 2006

  12. 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) • 37.6%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 upon underage and pathological drinking financially dependent “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 “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

  13. The Berceau Proposal

  14. 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

  15. 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

  16. 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 82% of its value due to inflation • If adjusted for inflation, beer would be taxed at over $10 a barrel, instead of $2 currently • Rep. Berceau’s proposed $8 increase per barrel would raise million annually $40

  17. How much do we collect? • Wisconsin residents pay about 3.6¢ per six-pack ($2.00 a barrel) • The Wisconsin state beer tax raised $9.76 million in FY2005-06 • It’s estimated to raise only $9.4 million in FY2007-08 Wisconsin Legislative Fiscal Bureau, Informational Paper #8: Alcohol and Tobacco Taxes, January 2007

  18. Wisconsin’s beer tax in context • Wisconsin has the third lowest beer tax in the nation (6.5¢ per gallon) (headquarters of Miller Brewing Co.) • 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

  19. 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 2007

  20. 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 2007

  21. 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 8.5 million barrels of beer in 2006 • We exported 5.9 million barrels (69%), all from WI taxation • The remaining 2.6 million barrels were taxed, and consumed in-state • So, only of the beer produced in Wisconsin was subject to the WI beer tax • Only 26% was taxed at the 100% rate exempt 31% Wisconsin Department of Revenue, 2007

  22. Most Wisconsin beer producers pay only half of our tax • There were 66 Wisconsin Beer Producers in 2006 • 61 were taxed at the 50% beer tax rate (92%) • 4 were taxed at a combination of the 100% and 50% rate (6%) • 1 was taxed entirely at the 100% rate (2%) • The top four: Leinenkugel, Miller, Pabst and Mike’sLemonade account for 95% of all revenue from in-state producers • Miller alone accounts for 77% of all in-state producer beer tax revenue Wisconsin Department of Revenue, 2007

  23. Most Wisconsin beer producers pay little in taxes • Between $0-$100 14 breweries • Between $100-$1,000 28 breweries • Between $1,000-$5,000 10 breweries • Between $5,000-$10,000 3 breweries • Between $10,000-$30,000 4 breweries • Between $30,000-$50,000 2 breweries • Between $50,000-$100,000 1 brewery • Between $100,000-$1,000,000 3 breweries • Over $1,000,000 1 brewery (Miller) Wisconsin Department of Revenue, 2007

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

  25. Seven increases since 1980!

  26. Increases Almost Every Year Since 1983!

  27. No increase in 37 years!

  28. QuizHow many six-packs must be sold to produce the same state excise tax revenue generated by one carton of cigarettes? 210 R. J. Reynolds Company

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

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

  31. Our Response: A • 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

  32. Our Response: B is • The beer tax progressively structured when considering family expenditures • A 1990 Congressional Budget report stated that: “to the extent that family expenditures rather than family income better reflect lifetime income,expenditures on alcohol are progressive.” U.S. Congressional Budget Office. Federal Taxation of Tobacco, Alcoholic Beverages, and Motor Fuels. A CBO Study. Washington, D.C., 1990.

  33. 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

  34. A False Our Response: Beer consumption is approximately evenly split across upper and lower income levels Adams Beer Handbook, 2003

  35. 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 Adams Beer Handbook, 2003

  36. 60%of regular beer consumers earn incomes of$50,000or more While, Wisconsin’s median household income is only about$46,000 Adams Beer Handbook, 2003

  37. Alcohol, in general, is used across the board • The same 1990 Congressional Budget Office report found that expenditures on alcohol represented similar percentages of total family expendituresacross income classes. • Indeed, “the budget share for alcoholic beveragesactually rises with adjusted family income.”

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

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

  40. The heaviest drinking 10% of beer drinkers consume a whopping of reported beer consumption 43% 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.

  41. 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.

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

  43. Besides …. The average price of beer has fallen by more than 25% relative to the Consumer Price Index over the past half-century Fact Sheet About Beer Taxes, Center for Science in the Public Interest: Alcohol Policies Project

  44. 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

  45. 2.4¢ If a per bottle tax increase will cause you financial burden …. You have worse problems to deal with than the beer tax

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

  47. 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 Alcohol Policies Project of the Center for Science in the Public Interest, citing: Bureau of Labor Statistics of the U.S. Department of Labor

  48. 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

  49. 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. (200). 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.

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

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