There is one California trend that the liquor industry is desperately trying to stop before it sweeps across the country: increased excise taxes to make liquor pay for the havoc it wreaks.
California voters will decide on Nov. 6 whether to increase the state liquor tax to the equivalent of 5 cents a drink. The money raised would go directly to alcohol abuse programs, shelters for battered women, drunk driving enforcement and other expenses the government must pick up when people drink too much.
For 20 years, the powerful liquor industry has kept the state's alcohol excise taxes so low that those taxes now net a paltry $129 million a year while alcohol abuse costs California taxpayers $11.7 billion a year in property damage, social welfare programs, health care, reduced productivity and prisons. In the state that is home to "wine country," the tax on wine has not been increased since 1937.
Alcohol producers and wholesalers aren't about to lose their sweet deal without a fight. To date, they have pumped more than $17 million into a campaign to kill the Nickel-A-Drink Initiative. Almost $13 million of that has come from out of state.
The national liquor industry knows this is a fight that is too big for California producers to win on their own, and it could set a nasty precedent. The industry has created Taxpayers for Common Sense, a campaign organization through which most of the money is funneled to beat the initiative.
The financial reports of who is funding the battle against the higher taxes read like the labels on bottles behind the bar. The Beer Institute of America, with money from Anheuser-Busch, Miller and Coors, has contributed more than $6 million to the campaign. Guinness gave $145,069 just in the month of June. Hiram-Walker gave $168,681 to the cause and Jim Beam has coughed up $89,223.
Money may not be enough this time because the case against alcohol is so solid. According to the National Highway Traffic Safety Administration, 22,415 people died last year in alcohol-related traffic accidents nationwide. One estimate of what the federal government spends each year because of alcohol abuse is $23 billion. In California last year, 2,189 people died of causes directly attributed to alcohol, and 72,419 were involved in alcohol-related traffic accidents.
Jim Sanders, president of the Beer Institute, told our associate Tim Warner that the initiative "is just another tax put out by do-gooders and social engineers who will take the money and spend it for more government, and increase taxes on consumers."
That kind of rhetoric is common in California these days, but the liquor industry is too smart to fight this battle with words alone. Instead, it persuaded some members of the California legislature to put another initiative on the ballot proposing a 1-cent tax as an amendment to the state constitution. A third question on the ballot, also the brainchild of the liquor industry, would require approval of two-thirds of the voters statewide for an increase in any excise tax.
Using this divide-and-conquer technique, the liquor industry hopes to confuse and fracture the vote so the Nickel-A-Drink Initiative doesn't get the margin of victory it needs -- one vote over 50 percent.