February 16, 2009 in Idaho

Idaho beer and wine tax increase introduced

By The Spokesman-Review
 
Betsy Russell photo

Keith Allred, a former Harvard professor who heads the Idaho good-government group The Common Interest, proposes legislation to raise Idaho’s beer and wine taxes to fund substance abuse treatment. The taxes haven’t been raised in more than 40 years, and are imposed by volume, not price. The House Revenue & Taxation Committee voted 10-8 to introduce the bill.
(Full-size photo)

On the Web
Read Idaho Legislature news and more at reporter Betsy Russell’s blog, Eye on Boise

BOISE – Idaho’s beer and wine taxes would more than triple to pay for substance-abuse treatment under legislation that narrowly won introduction in a House committee on Monday.

The state’s beer and wine taxes haven’t increased in more than 40 years. Keith Allred, head of The Common Interest, a government watchdog group, estimated that the higher tax would cost the purchaser of a weekly six-pack about 91 cents more a month.

Idaho spends about $19 million annually on substance abuse treatment, Allred told the panel. “We’re just suggesting that some of that ought to be offset by those who drink alcohol.”

Opponents, led by Rep. Jim Clark, R-Hayden Lake, decried the idea and nearly killed it, falling short on an 8-10 vote. Clark said the tax’s lack of change in more than 40 years is no reason to raise it when another state tax, the kilowatt-hour tax, hasn’t been raised in 70 years. “Why don’t you just go after that instead?” he asked Allred.

Allred responded, “The policy purposes … are quite different.”

Rep. Lenore Barrett, R-Challis, said, “I don’t drink any more, but I’m gonna be driven to drink if we don’t straighten up in the Legislature. This is not an illegal business. … I just think they’re paying fair taxes now and I don’t see any reason to increase it.”

North Idaho lawmakers on the House Revenue and Taxation Committee split in the close vote, with Rep. George Sayler, D-Coeur d’Alene, voting to introduce the bill, and Reps. Clark, Dick Harwood, R-St. Maries, and Phil Hart, R-Athol, voting to kill it.

Sayler said, “We need that discussion. I’ve been hearing about that ever since I’ve been in here. This looks like a good proposal.”

The beer and wine industry has held off attempts to raise its taxes in part by employing one of the state’s most formidable lobbyists, attorney and former state lawmaker Bill Roden.

Allred said the beer tax, which is imposed per gallon and hasn’t risen since 1961, and the wine tax, also on volume and not raised since 1971, would have to go up much more to have the same purchasing power as when they were imposed. He proposed switching to a percentage tax on price, rather than on volume, so such slippage wouldn’t happen again.

Rep. Ken Roberts, R-Donnelly, questioned whether that approach would target buyers of the priciest products to pay for abuse by purchasers of the cheap stuff, but Allred, a former Harvard professor, said it evens out.

The 5 percent or 10 percent of alcohol drinkers who drink the most account for 70 to 80 percent of the alcohol consumed, he said. “So the beer tax and the wine tax turns out to be borne primarily by those who abuse it.”

Committee Chairman Dennis Lake, R-Blackfoot, noted that when he co-sponsored a similar bill several years ago, it didn’t even get introduced. “There seems to be more support,” he said. “I think it needs to be done.”

The measure would more than triple the 15-cent-per-gallon beer tax to 52 cents and boost the 45-cent-per-gallon wine tax to $1.56. Idaho’s beer tax is the 37th highest in the nation, while its wine tax ranks 34th. If the bill passes, the beer tax would be the ninth highest and the wine tax the seventh.

Nationally, the median beer tax is about 19 cents per gallon and the wine tax 69 cents, according to the Federation of Tax Administrators, a Washington, D.C.-based organization of state tax officials.

The Associated Press contributed to this report.

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