Tuesday, August 27, 2002

Beer, liquor lobbies press for cut in sin taxes

The Associated Press

        WASHINGTON — As several states consider trimming budget deficits by raising taxes on beer, liquor and wine, the industry is finding support in Congress to cut the federal excise tax on alcoholic beverages.

        Already, more than 200 lawmakers seeking re-election — many beneficiaries of the industry's political largesse — have signed on to tax cut proposals. Industry lobbyists say if the bills do not pass this year, they hope they'll be first in line the next time Congress considers tax cuts.

        “There's lots of good reasons to pursue this legislation that go beyond getting it passed,” said Frank Coleman, spokesman for the Distilled Spirits Council of the United States.

        If anyone suggests raising the federal excise tax on liquor, “you already have a solid bloc of people who say, "Your taxes are too high and/or inequitable,”' he said.

        At least 18 states have raised cigarette taxes in recent months. At least 15 have considered raising alcoholic beverage taxes; of those, Alaska and Tennessee have approved increases.

        In Oregon, the Distilled Spirits Council convinced lawmakers it would be more profitable to allow liquor sales on Sunday than to raise the state tax, a victory the council hopes to repeat in other states with laws banning Sunday sales, including New York.

        The spirits tax cut proposal is sponsored by Rep. Ron Lewis, R-Ky., a Baptist preacher who doesn't drink. Lewis' district includes several bourbon distilleries, spokeswoman Kathy Reding said. About 100 lawmakers are co-sponsoring Lewis' bill.

        Rep. Phil English, R-Pa., proposes cutting the beer tax in half, from the current $18 per barrel to $9, its 1990 level. That would save beer drinkers about 16 cents a six-pack. At least 223 lawmakers — more than half the House — have signed on to his legislation.

        The beer lobby is portraying the beer tax as unfair to working-class Americans. A poster handed out on Capitol Hill features Uncle Sam sternly declaring, “I want half your beer,” and says taxes take about 44 cents of every dollar spent on beer.

        The poster promotes an Anheuser-Busch “Roll Back the Beer Tax” Web site featuring profiles of “Joe and Jane Six-Pack: The Average American Beer Drinkers,” described as “young, average Americans, many of whom are raising a family.”

        “Lowering the beer tax means more money in the pockets of these young, hardworking men and women,” the Web site said.

        English said the current economic slowdown is a good time to “pass back to a lot of working-class consumers a little bit of their tax money.”

        “I think this is a fairness issue,” he said.

        The beer tax was doubled in 1991 legislation that also raised the taxes on yachts, furs and other luxury items, English said. Although many of those taxes were later rolled back, the beer tax remained at the higher level, he said.

        If Congress grants the tax cuts, it would provide a long-sought victory to an industry that has been a prolific giver of campaign cash this election year.

        Beer, wine and liquor interests have donated at least $3.7 million to congressional Republicans and national party committees and $2.6 million to their Democratic counterparts for this fall's election, according to figures compiled by the Center for Responsive Politics, a nonpartisan center that studies political donations.

        Lewis and English both count the industry among their top donors. Reding said Lewis' bill is driven by distilleries' importance as an employer in his district. English said his campaign has a broad base of support and isn't dependent on industry money.

        The talk of federal cuts comes as several states consider raising sin taxes to help trim budget shortfalls.

        Portland liquor store operator Robert Hesla said he opposed the Sunday sales legislation in part because it came from a national lobby rather than local interests. Besides, with little traffic on his street on Sundays, opening a seventh day wouldn't pay, he said.

        Virginia Harris of Portland said her store is selling enough on Sundays to make it cost-effective. Roughly one-fourth of Oregon's liquor stores have opened on Sundays since it became legal in April.

        Tom Towslee, a spokesman for Democratic Gov. John Kitzhaber, said it's unlikely to have much effect on the budget deficit, which stood at about $350 million after $1 billion in cuts. Oregon's liquor taxes are among the lowest, he noted.

        “The options are getting fewer and fewer,” Towslee said. “It should not be off the table just because the liquor industry has a powerful lobby.”


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