Stiff ‘Nickel-a-Drink’ Tax on Alcohol Proposed by Coalition

The state’s tax on alcoholic beverages, which has not been increased for decades, will skyrocket under a “nickel-a-drink” initiative unveiled Thursday by a coalition of alcohol treatment, trauma care and law enforcement groups.

Taking on one of the state’s most powerful industries, backers of the tax hike said their measure will raise $800 million a year and force drinkers to pay a larger share of the state’s cost of alcohol-related problems.

“A nickel a drink is not going to harm anybody,” said Los Angeles County Supervisor Ed Edelman, a leader in the initiative drive. “It’s something I think we can all live with.”

For wine, which has not been subjected to a tax increase in more than 50 years, the proposed ballot measure would mean a jump from 1 cent to $1.28 a gallon. The tax on beer would rise from 4 cents to 20 cents a gallon. And the tax on liquor would go from $2 to $6.40 a gallon. Beer taxes were last raised in 1959; liquor taxes were raised in 1967.

Representatives of the alcoholic beverage industry immediately predicted that the measure will cost their business $290 million a year in sales and 6,000 jobs if the measure qualifies for the ballot and is approved by voters.

The alcoholic beverage manufacturers, who have successfully blocked proposed tax increases in the Legislature, pledged an all-out effort to defeat the measure by combining grass-roots mobilization with an unlimited campaign budget.

“I’m going to defend to the death my glass of Chardonnay,” said John De Luca, president of the Wine Institute. “This is going to be a jihad for us; this is going to be a holy war. We’re going to raise whatever it takes.”

The measure, slated for the November, 1990, ballot, would impose a tax of 5 cents for each 12 ounces of beer, five ounces of wine or one ounce of liquor sold in the state.

The alcohol tax initiative has been spearheaded by Assemblyman Lloyd Connelly (D-Sacramento), a leader in last year’s successful Proposition 99 campaign to raise the cigarette tax by 25 cents a pack.

Connelly and other backers of the measure contend that alcohol abuse costs California taxpayers more than $13 billion a year in drunk-driving accidents, emergency medical care, alcoholism treatment, mental health care, law enforcement and the care of battered women and abused children.

Under the initiative proposal, the increased tax revenue will be divided among programs that serve these groups--programs such as trauma care centers that have not fared well under the budgets of the Deukmejian Administration.

“Over 50% of the cases that are brought into our emergency and trauma network are alcohol related,” Edelman said at a Capitol news conference. “They’re a victim of drunk driving, they’re a victim of physical abuse by someone who is intoxicated. And so the cost of providing trauma and emergency care should be shifted to the users, or abusers, if you will, of alcohol.”

Drafters of the measure have also attempted to take advantage of the public’s concern about drugs by including drug abuse in the measure and providing funds to many drug-related programs.

Under the proposal, 25% of the funds raised will go to emergency and trauma care; 24% will be devoted to alcohol and drug treatment programs; 21% will go to law enforcement; 15% will go to community mental health programs, and 15% will go to programs that serve battered women, abused children and other victims of alcohol and drug abuse.

Most of the money would be funneled directly to local governments, circumventing the state budget process. The proposed constitutional amendment would also exempt the new tax revenues from the state’s spending limit.

The coalition supporting the initiative is made up of groups whose programs would receive the major benefit of the measure. They include the California Assn. of Highway Patrolmen, the California Chapter of the American College of Emergency Physicians, the California Council of Alcohol Problems, the California Network of Mental Health Clients and the California Consortium of Child Abuse Councils.

De Luca of the Wine Institute charged that organizers of the initiative solicited commitments of campaign support from organizations in exchange for including their programs in the measure.

“On this initiative there should be a warning label that says ‘This initiative is contaminated by money,’ ” he said. “In return for your dollars and signatures you get money back.”

But Connelly denied that any group had been offered money in exchange for campaign support and said the alcohol industry’s allegation is “scandalous and outrageous.”

“This is the same group that contributes about a million dollars each legislative session to ensure that there hasn’t been an increase in the alcohol tax,” he said.

Connelly said he expects the industry to spend as much as $30 million to defeat the measure--10 times what the proponents plan to spend.

The industry already has launched its counteroffensive, pushing a rival ballot measure in the Legislature that would raise alcohol taxes, but by a much more modest amount. The industry proposal calls for a 20-cents-a-gallon increase for beer and wine and $3.17-a-gallon increase for spirits.

The vintners and brewers say the coalition’s initiative would impose an unfair burden on an industry that already produces hundreds of millions of dollars in revenues from property and income taxes.

“No one went around looking for this fight,” De Luca said, “but if they want to fight we can give it to them.”

NEXT STEP

The “nickel-a-drink” proposal needs to be certified by the attorney general’s office before its backers can begin collecting the 595,485 signatures necessary to take the measure to the voters. The signatures must be gathered within 150 days of the attorney general’s certification.