Liquor Lobby Gets Its Own Tax-Hike Plan Past Senate

The Senate on Thursday overwhelmingly approved legislation sponsored by the liquor lobby to increase taxes on alcoholic beverages--but at drastically lower levels than those proposed by a November ballot initiative.

Opponents of the legislation denounced it as an “arrogant” power play by wine, beer and hard liquor interests to undercut the so-called “nickel-a-drink” initiative and shield the industry from a heavier tax hit.

But supporters in the Senate, although conceding that alcoholic beverage taxes are overdue for an increase, said the liquor lobby’s plan merely offers voters a “fair and reasonable” alternative.

The measure was returned to the Assembly on a 30-4 vote, three more than the two-thirds majority required for passage. Its chances in the Assembly--which earlier approved a vastly different version--are rated as favorable. As a proposed constitutional amendment subject to voter approval, the plan is not subject to action by Gov. George Deukmejian.

Under the legislative plan, the per-gallon tax on table wine would increase from 1 cent to 20 cents; from 4 cents to 20 cents on beer, and from $2 to $3.30 on hard liquor.

The initiative, meantime, would hike the tax per gallon to $1.29 cents on wine; 57 cents on beer, and $8.40 on hard liquor. Representatives of the “nickel-a-drink” campaign said the extra tax levy would break down to a nickel each on a can of beer, a five-ounce glass of table wine and a one-ounce shot of liquor.

For decades, the liquor lobby--a generous source of campaign contributions to members of both parties--has been a singularly low profile but highly influential pressure group in Sacramento with a reputation for seldom losing a political fight.

But the notion of offering through the Legislature a plan that would undercut the “nickel-a-drink” enterprise angered Sen. Ed Davis (R-Santa Clarita).

Davis blistered the legislation as an “arrogant attempt on the part of a powerful industry that has had their way for decades around here” to head off the heavier tax. “We have an obligation to the people who use the initiative process not to thwart them,” he said.

However, Sen. Alfred Alquist (D-San Jose), floor manager of the proposal, appealed to the Senate to “give the voters of California a choice in November.” He called the initiative a “thinly disguised attempt at prohibition.”

An estimated $230 million a year would be raised by the legislative proposal and would be available for expenditure by the governor and Legislature for support of state government operations--a highly attractive feature, especially during tough fiscal times.

The initiative campaign estimates its program would raise $730 million annually. The revenue would be earmarked for specific programs such as alcoholism treatment and prevention, law enforcement, trauma center services and mental health. The money could not be diverted to other purposes.

Sen. Gary K. Hart (D-Santa Barbara), who ended up voting for the plan, told the Senate that the alcoholic beverage industry “saw the handwriting” on the wall two years ago after voters approved an initiative imposing hefty new taxes on tobacco products and “came up with a proposal of their own” to head off a liquor tax initiative.

“Maybe it’s good to have a choice,” he said of the industry program. “I think that is what the people are entitled to.”

Sponsors of the alcohol tax initiative recently filed 1.1 million signatures to qualify the proposal for the ballot. Both sides expect a costly and fiercely fought general election campaign.