To: EXAMPLE, EXAMPLE
Subject: Beer tax increase
Summary and Background:
There has been a proposal in the Wisconsin Legislature to raise the beer tax from the current beer tax of .6 of a cent per 12 oz. of beer to 5 cents per 12 oz. of beer. This tax has not been raised in 40 years. The beer tax has been left untouched in Wisconsin politics largely due to a beer drinking culture. The tax has also been untouched due to past and current economic interests associated with beer production and sales in the state. Groups that agree to raise the beer tax are health and safety organizations concerned with Wisconsin’s “Drinking Culture”, and a rising number of people concerned with the state’s finances. Groups opposed are tavern leagues, brewers, and a long standing culture of beer drinking. There is concern that this tax may cost the consumer more due to a mandatory 3-tier tax system. This proposed taxed increase lacks detail and that is a major cause for the push-back against it.
Issues raised:
How will this tax be spent? How much will this tax be on the backs of brewers and distributors? With this create unintended job loss? Is 5 cents per 12 oz. a justified increase from .6 of a cent? Should other alcohols receive a tax increase? Is a beer tax a regressive tax?
Recommendations:
1. This tax should also be earmarked for highway spending, drug courts, entitlements and some other drinking associated spending measures. It is important to show how this measure will aid local municipalities, and counties – i.e. highway maintenance, which would alleviate the counties to take on other projects and social programs.
2. It should be stipulated that this tax will only be incurred on the consumer, and not the industry itself. This will address concerns over the 3-tier tax system. It will also help alleviate concerns over job loss. While an increase in price will usually cause a decrease in demand, beer remains an affordable alternative to other alcoholic beverages.
3. Other alcohols haven't been as protected as beer, and they are not as heavily consumed as the 38.2 gallons of beer per person in Wisconsin. Meaning other alcohols should continue to be exempt from this policy
4. This suggested tax increase should be brought to a similar level in neighboring states i.e. Minnesota at 1.5 cents per 12 oz., and Michigan at 2 cents as reported by the Federation of Tax Administrators.
Arguments:
1. This tax has been shown by the University of Wisconsin-Madison Population Health Institute to decrease the amount of alcohol consumed among people of low income and heavy drinkers. This may be an important tool for combating Wisconsin’s binge drinking problem. As the Wisconsin Department of Health Services reports, 23% of adults participate in binge drinking compared to the 16% national average.
2. In these hard economic times it is important to create new sources of revenue to maintain current services that are essential to under-privileged and struggling populations. Given that the state of Wisconsin provides healthcare coverage under badger care, and relatively high levels of public services it is crucial to maintain a healthy tax flow.
3. A Wisconsinite drinks an average of 4672 oz. of beer a year, as reported in 2010. Assuming a tax of 1.5 cents per 12 oz., a Wisconsinite on the average would be contributing $5.84 in yearly revenue. This is compared to $2.34 under the current tax. A $3.5 difference for an averaged drinker. A minor change in the budgeting for the consumer, while a considerable increase in this revenue stream for the state.
4. The Population Health Institute has also shown that there is decrease in alcohol related crimes, including rape, domestic abuse, and child abuse. Underage drinking also decreases, which could stand to decrease the number of teen deaths due to alcohol poisoning, and drunk driving.
5. While any increase may seem dramatic it has been 40 years since the tax has been adjusted for the Consumer Price Index. The same could be said for the tax being adjusted to counter balance the adverse effects it has on society, and the demand that it in part creates upon the State's high levels of services.
6. Although an increase on a universally bought commodity is a regressive tax (given that the tax would consume a greater percentage of the expendable income of those with low income than those of higher), it can be argued that in a high-service state, such as Wisconsin, those who would be impacted in a regressive manner would also receive the redistribution of such a tax in social programing, food-stamps, etc.
Sources:
2009 Assembly Bill 287. State of Wisconsin 2009-2010 Legislature. Web. 19 Nov. 2011.
“Alcohol Consumption.” Wisconsin Epidemiological Profile on Alcohol and Other Drug Use. P. 50-67. Wisconsin Department of Health Services, 2010. Web. 19 Nov. 2011.
Hynes, Emma. “Increasing Wisconsin’s Beer Tax: Would it Improve the State’s Health? At What Cost?” University of Wisconsin Population Health Institute: Translating Research for Policy and Practice. Vol. 10, No. 1, p.1. University of Wisconsin Population Health Institute, 2010. Web. 19 Nov.2011.
O’Donoghue, Ted and Rabin, Matthew. “Optimal Sin Taxes.” Vol. 90. No. 10-11, p. 1825-1849 Journal of Public Economics, 2010. Web. 19 Nov. 2011.
“Shipments of Malt Beverages and Per Capita Consumption by State.” http://www.beerinstitute.org/BeerInstitute/files/ccLibraryFiles/Filename /000000001270/State%20Per%20Capita%20Consumption%202003%20to%202010.pdf. The Beer Institute. Web. 19Nov. 2011. (online)
Walters, Steven. “Legislators want to raise beer tax” Milwaukee Journal Sentinel. 15 May 2007. <http://www.jsonline.com/news/wisconsin /29348554.html>. (online)
Subject: Beer tax increase
Summary and Background:
There has been a proposal in the Wisconsin Legislature to raise the beer tax from the current beer tax of .6 of a cent per 12 oz. of beer to 5 cents per 12 oz. of beer. This tax has not been raised in 40 years. The beer tax has been left untouched in Wisconsin politics largely due to a beer drinking culture. The tax has also been untouched due to past and current economic interests associated with beer production and sales in the state. Groups that agree to raise the beer tax are health and safety organizations concerned with Wisconsin’s “Drinking Culture”, and a rising number of people concerned with the state’s finances. Groups opposed are tavern leagues, brewers, and a long standing culture of beer drinking. There is concern that this tax may cost the consumer more due to a mandatory 3-tier tax system. This proposed taxed increase lacks detail and that is a major cause for the push-back against it.
Issues raised:
How will this tax be spent? How much will this tax be on the backs of brewers and distributors? With this create unintended job loss? Is 5 cents per 12 oz. a justified increase from .6 of a cent? Should other alcohols receive a tax increase? Is a beer tax a regressive tax?
Recommendations:
1. This tax should also be earmarked for highway spending, drug courts, entitlements and some other drinking associated spending measures. It is important to show how this measure will aid local municipalities, and counties – i.e. highway maintenance, which would alleviate the counties to take on other projects and social programs.
2. It should be stipulated that this tax will only be incurred on the consumer, and not the industry itself. This will address concerns over the 3-tier tax system. It will also help alleviate concerns over job loss. While an increase in price will usually cause a decrease in demand, beer remains an affordable alternative to other alcoholic beverages.
3. Other alcohols haven't been as protected as beer, and they are not as heavily consumed as the 38.2 gallons of beer per person in Wisconsin. Meaning other alcohols should continue to be exempt from this policy
4. This suggested tax increase should be brought to a similar level in neighboring states i.e. Minnesota at 1.5 cents per 12 oz., and Michigan at 2 cents as reported by the Federation of Tax Administrators.
Arguments:
1. This tax has been shown by the University of Wisconsin-Madison Population Health Institute to decrease the amount of alcohol consumed among people of low income and heavy drinkers. This may be an important tool for combating Wisconsin’s binge drinking problem. As the Wisconsin Department of Health Services reports, 23% of adults participate in binge drinking compared to the 16% national average.
2. In these hard economic times it is important to create new sources of revenue to maintain current services that are essential to under-privileged and struggling populations. Given that the state of Wisconsin provides healthcare coverage under badger care, and relatively high levels of public services it is crucial to maintain a healthy tax flow.
3. A Wisconsinite drinks an average of 4672 oz. of beer a year, as reported in 2010. Assuming a tax of 1.5 cents per 12 oz., a Wisconsinite on the average would be contributing $5.84 in yearly revenue. This is compared to $2.34 under the current tax. A $3.5 difference for an averaged drinker. A minor change in the budgeting for the consumer, while a considerable increase in this revenue stream for the state.
4. The Population Health Institute has also shown that there is decrease in alcohol related crimes, including rape, domestic abuse, and child abuse. Underage drinking also decreases, which could stand to decrease the number of teen deaths due to alcohol poisoning, and drunk driving.
5. While any increase may seem dramatic it has been 40 years since the tax has been adjusted for the Consumer Price Index. The same could be said for the tax being adjusted to counter balance the adverse effects it has on society, and the demand that it in part creates upon the State's high levels of services.
6. Although an increase on a universally bought commodity is a regressive tax (given that the tax would consume a greater percentage of the expendable income of those with low income than those of higher), it can be argued that in a high-service state, such as Wisconsin, those who would be impacted in a regressive manner would also receive the redistribution of such a tax in social programing, food-stamps, etc.
Sources:
2009 Assembly Bill 287. State of Wisconsin 2009-2010 Legislature. Web. 19 Nov. 2011.
“Alcohol Consumption.” Wisconsin Epidemiological Profile on Alcohol and Other Drug Use. P. 50-67. Wisconsin Department of Health Services, 2010. Web. 19 Nov. 2011.
Hynes, Emma. “Increasing Wisconsin’s Beer Tax: Would it Improve the State’s Health? At What Cost?” University of Wisconsin Population Health Institute: Translating Research for Policy and Practice. Vol. 10, No. 1, p.1. University of Wisconsin Population Health Institute, 2010. Web. 19 Nov.2011.
O’Donoghue, Ted and Rabin, Matthew. “Optimal Sin Taxes.” Vol. 90. No. 10-11, p. 1825-1849 Journal of Public Economics, 2010. Web. 19 Nov. 2011.
“Shipments of Malt Beverages and Per Capita Consumption by State.” http://www.beerinstitute.org/BeerInstitute/files/ccLibraryFiles/Filename /000000001270/State%20Per%20Capita%20Consumption%202003%20to%202010.pdf. The Beer Institute. Web. 19Nov. 2011. (online)
Walters, Steven. “Legislators want to raise beer tax” Milwaukee Journal Sentinel. 15 May 2007. <http://www.jsonline.com/news/wisconsin /29348554.html>. (online)