February 25, 2009 in Idaho

Idaho rejects beer tax increase

By The Spokesman-Review

BOISE - After three days of long and intense hearings and an even more intensive lobbying campaign, Idaho lawmakers on Wednesday rejected legislation to raise the state’s beer and wine tax.

The measure, HB 140, was designed to raise a volume-based tax that hasn’t been raised in four decades, to fund substance abuse treatment services. That’s an area Idaho has struggled to fund the last few years, as it’s expanded services in an effort to trim the state’s large prison population.

But the House Revenue and Taxation Committee voted 13-5 to kill the bill, a surprisingly lopsided outcome in a vote that was expected to be very close.

“It was a good vote,” said Bill Roden, lobbyist for the Idaho Beer and Wine Distributors Association. “We worked at it.” The 80-year-old longtime lobbyist, attorney and former state legislator said, “It wasn’t my effort only. You have to understand, this was a very broad coalition of groups - retailers, the wineries, the breweries, just the general business community.”

North Idaho committee members split, with Rep. George Sayler, D-Coeur d’Alene, favoring the bill, while Reps. Jim Clark, R-Hayden Lake; Dick Harwood, R-St. Maries; and Phil Hart, R-Athol, voted to kill it.

House GOP Caucus Chair Ken Roberts, R-Donnelly, said, “I want to make sure I give notice to the beer and wine industry that it is time to step up to the table and have an increase that is supported by that industry, to help fund substance abuse treatment in this state.” However, he said he thought the bill, which the industry vehemently opposed, was flawed.

Rep. James Ruchti, D-Pocatello, said, “This is not the right time to be raising a tax on Idaho’s businesses.” Doing so, he said, “would send a message that their government doesn’t get it.”

Several industry lobbyists told the committee they would never support any increase in Idaho’s beer or wine taxes.

Clark was among the most vocal opponents of the bill on the committee. “Basically it’s just bad tax policy,” he declared.

Clark questioned advocates who said the measure would provide a “stable” funding source for substance abuse services in Idaho. “I’m not sure beer and wine drinkers are a real stable revenue source,” Clark said.

Keith Allred, a former Harvard professor and the bill’s sponsor on behalf of the good-government group The Common Interest, countered, “There are few products you can find that are more recession-proof than beer and wine. That speaks to the stability.”

Lobbyist Alex LaBeau of the Idaho Association of Commerce and Industry called the bill a “slippery slope,” and suggested, tongue-in-cheek, that perhaps Idaho should target obesity by taxing red meat and cheese.

Rep. John Rusche, D-Lewiston, asked him, “Do red meat and cheese lead to incarceration and domestic violence?” “Clearly they do not,” LaBeau responded, but said he was merely making a point that they, too, like the drinking of wine and beer, have “a societal cost.”

Several lobbyists who opposed the bill said responsible drinkers shouldn’t have to pay for substance abuse services they don’t need, though Allred said the alternative is that non-drinkers pay for the services through general tax funds, rather than those who do drink. He said research shows that those who abuse alcohol drink by far the most alcoholic beverages, and thus would pay most of the tax.

Harwood said rather than focus on treatment, perhaps Idaho should focus on education and prevention, and look to the Idaho Meth Project as a model for how to approach alcohol abuse. That project includes a statewide “Not Even Once” ad campaign.

“I don’t know how to do that, Mr. Chairman, but I know it’s bothering me,” Harwood said.

Rep. JoAn Wood, R-Rigby, who fervently urged her fellow lawmakers to support the bill, said, “This is a powerful lobby that’s been lobbying us. … I resent having people in my district come to me and tell me they’ve been threatened with losing their jobs (if the bill passes). … I think that is unconscionable.”

Sayler said, “I question the argument about ‘the time is not right.’ My question is, if not now, when? … It hasn’t been the right time for 48 years. … I think that the time for action is here.”

Said Wood, “We’ve been waiting for 40 years to find a compromise - my goodness, Mr. Chairman, that’s probably enough.”

Roden, asked afterward if he’d still work with proponents of the bill this year on a possible compromise, said, “I don’t think there’s time this year to really consider it.”

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