10 Cents A Drink: Helping California Prevent Alcohol-Related Problems

March 02, 2009
Contact: Rodney Foo @ (408) 282-8920

Legislation to raise the alcohol excise tax by 10 cents per drink for wine, beer, and liquor to help pay for the $38 billion California spends annually on alcohol-related accidents, fatalities, and trauma care has been introduced by Assemblymember Jim Beall, Jr.

“The alcohol industry creates devastating problems – traffic accidents, alcoholism – and walks away with money stuffed in its pockets while the public -- including non-drinkers -- are left to pay billions for the mess,’’ said Beall, D-San Jose.

“Some drinkers who cause the problems are made responsible for their actions in court and in jail. But what they pay doesn’t put a dent in the $38 billion that Californians pay every year for alcohol-related accidents, deaths, injuries, illnesses, or babies born with Fetal Alcohol Syndrome.

“Do you really think that the problem-causing drinker pays for the lifetime medical or social service costs of someone disabled in a DUI accident? No. But the state of California picks up the bill – you and me. It’s time for the alcohol industry to face their responsibilities and pay their fair share toward making California a healthier and safer place to live.’’

Assembly Bill 1019 would raise $1.2 billion in new revenue that would be used to pay for:

  • Emergency, medical, trauma care services.
  • A coordinated statewide training, public policy, educational and public awareness program to prevent alcohol abuse and inform youths about the health risks linked to drinking.
  • Treatment and recovery services for alcohol and drug problems.
  • Enforcement of alcohol- and drug-related laws and associated justice costs.
  • Prevention, treatment, screening and care for the health needs of infants, children, and mothers connected to perinatal alcohol use.

Michele Simon, Research and Policy Director at the Marin Institute and co-author of last year’s ground-breaking report, The Annual Catastrophe of Alcohol in California, said: “Every year, alcohol-related incidents cost California $22 billion for injuries and illnesses, $8 billion in traffic and DUI expenses, and another $8 billion due to crimes. The $38 billion total is twice the costs attributed to tobacco use.’’

"Taxing tobacco to pay for health costs is now widely accepted,'' Beall said.  "In fact, President Obama raised taxes on tobacco to expand children's health coverage a few weeks ago. Why should alcohol be treated differently?''

Historically, the alcohol industry in California has gone long periods in between tax increases. The percentage increases have typically ranged from the double digits to four digits.

Taxes on beer, wine, and distilled liquor have not risen in more than 17 years since July 15, 1991. At that time:

  • Beer went from 4 cents to 20 cents per gallon, a 500 percent increase.
  • Wines with 14 percent or less alcohol went from 1 cent to 20 cents, a 2000 percent increase. Wines with more than 14 percent alcohol went from 2 cents to 20 cents, a 1000 percent increase.
  • Distilled spirits went from $2 per gallon to $3.30 per gallon, a 65 percent increase.

AB 1019 would raise the tax on:

  • Distilled spirits to $12.80 per gallon, roughly a 290 percent increase, based on Board of Equalization calculations.
  • Wine would be taxed at $2.56 per gallon, an increase of more than 1100 percent.
  • The beer tax would be $1.07, an increase of approximately 400 percent.

In November, the Governor recommended raising alcohol taxes. Polling on the proposal showed that 85 percent of California residents agreed that the increase was acceptable and long overdue. AB 1019 has been modeled after the Governor’s proposal to improve its chances of passage and ratification. Last summer, Beall planned to introduce a constitutional amendment to increase the excise tax on beer but did not because voters demanded legislators focus on the budget stalemate.