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Recovery in the News

Legislators consider taxing Joe Sixpack where it hurts the most

Steve People
Journal State House Bureau
May 27, 2009

PROVIDENCE –– Facing crushing budget deficits, reluctant state lawmakers have already agreed to raise taxes on cigarettes and health-insurance premiums in recent months. But they have largely left Joe Sixpack out of the debate.

Until now.

Substance-abuse advocates have launched an effort to revive a long-ignored proposal to boost Rhode Island’s tax on beer. And some lawmakers are listening.

“I’ve always liked the idea,” said House Finance Committee Chairman Steven M. Costantino, noting a recent move by the Massachusetts’ legislature to eliminate its sales-tax exemption on alcohol. “I would say we’re looking at all potential revenue sources.”

Even a modest hike in the beer tax could discourage destructive drinking and bring millions of new dollars to the state’s depleted coffers, according to supporters. But alcohol distributors and liquor store owners say higher beer taxes could hurt both local businesses and thirsty Rhode Islanders.

“Ultimately, it will raise the cost of beer to the consumer,” said Charles M. Borkoski, vice president of marketing for McLaughlin & Moran, Rhode Island’s dominant beer distributor. “And the economic conditions in our industry are such that any reduction in sales could result in a reduction in personnel.”

But the beer tax supporters have been pushing hard this legislative session.

The executive director of the Drug and Alcohol Treatment Association of Rhode Island, Neil A. Corkery, has met with Costantino at least twice about nearly doubling Rhode Island’s beer tax, currently at 10 cents a gallon. The price of a six-pack would jump by about a nickel. Corkery estimates the increase could generate $3 million for the state.

And the nonprofit group, Rhode Island Communities for Addiction Recovery Efforts, led a State House rally yesterday, attracting more than 100 people to highlight its top legislative priority: increasing the state’s alcohol tax. The organization also launched a direct-mail campaign in recent days aimed at elected officials, who have avoided raising the beer tax since 1989.

“We do recognize that this is a difficult issue for legislators and that historically there is strong and influential opposition to an alcohol-tax increase,” RICARE director Ian Knowles said yesterday. “The primary reason for our position is the solid body of research that shows a wide range of benefits from higher taxes on alcohol beverages” such as a reduction in underage drinking, fewer car crash deaths and fewer deaths from alcohol-related diseases.

Rhode Island’s beer tax is the 10th lowest in the country, the lowest in New England (excluding state sales taxes) and trails the national average by 17 cents per gallon, according to the Washington D.C.-based Center for Science in the Public Interest. And while a handful of states are considering hiking alcohol taxes in the face of massive budget deficits — Massachusetts and New York among them — as many as 25 haven’t touched their beer tax rates for more than 20 years.

There’s a simple reason why, according to George A. Hacker, director of the Alcohol Policies Project at the Center for Science and the Public Interest.

“One needs to look at the depth and breadth at what is loosely called the alcoholic beverage lobby,” he said. “You want to be very careful before you take them on.”

Hacker noted the opposition’s well-funded efforts across the country that have included concerned liquor store owners, truck drivers, restaurant owners and, of course, “Joe Sixpack.”

But he disputes the notion that Joe Sixpack represents the average working Rhode Islander; only about one in four drinkers consume a six-pack a week, according to the National Epidemiologic Survey on Alcohol and Related Conditions. And Hacker found that fewer than 20 percent of drinkers consume the vast majority of 21.6 million gallons of beer sold in Rhode Island in 2007 (the most recent data available from the state Division of Taxation).

“Joe Sixpack is an abuse drinker really. That’s who pays the tax, someone who imposes a heavy cost on society,” he said.

But the alcohol industry has aggressively courted key decision-makers to resist higher state excise taxes, which are generally applied to alcohol distributors.

In Rhode Island, McLaughlin & Moran employees have made thousands of dollars in campaign contributions to a select group of top lawmakers in recent years, according to finance reports filed with the state Board of Elections:

Governor Carcieri, a Republican, has taken $9,850 since taking office in 2002; House Speaker William J. Murphy, a Democrat, has received $3,125 since 2003, the year he became the most powerful member of the House; and Rep. Brian Patrick Kennedy, D-Hopkinton, who chairs the House Corporations Committee, has received $1,100 from McLaughlin and Moran employees since 2003, according to the Board of Elections.

Borkoski said the donations are simply part of the political process.

“It’s certainly within anyone’s constitutional rights to make donations,” he said. “I don’t think they’re doing anything illegal by making contributions.”

No lobbyists have formally registered this legislative session to oppose a beer-tax increase, largely because no formal proposal has been introduced as legislation. Lawmakers who have sponsored the bill in previous years, such as Rep. Edwin R. Pacheco, D-Burrillville, have declined to publicly support the proposal, highlighting the political pitfalls associated with pushing a tax on the nation’s most popular alcoholic beverage.

But Costantino, a former lobbyist for the substance-abuse community, would not rule out the inclusion of a higher beer tax in the Assembly’s budget proposal for the fiscal year that begins July 1. Lawmakers must close a budget hole projected at $590 million.

“I just can’t make a commitment at this point,” Costantino said. The beer facts

Current taxes on a six-pack:

Federal excise tax: 33 cents

State excise tax: 5.6 cents

Beer is also subject to the state’s 7 percent sales tax.

Sources: R.I. Division of Taxation, Center for Science in the Public Interest

speoples@projo.com