Rep. Terese Berceau

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Rep. Terese Berceaus Beer Tax Proposal2007
2
Wisconsin has a serious alcohol problem

• We lead the nation in moderate to heavy alcohol
  consumption among pregnant women
• We have the highest adult binge-drinking rate
• We have the second highest college student
  binge-drinking rate
• We have the highest underage drinking rate in the
  country (39.5 between ages 12-20 over a month
  period)
• We rank 48th worst in the nation in
  alcohol-related per capita health care expenses
• In Wisconsin, alcohol and drug abuse is the 4th
  leading cause of death, behind heart disease,
  cancer and stroke

Report on the Findings of the Needs Assessment
Deliverable 3, FASD Prevention Initiative
Wisconsin Department of Health and Family
Services, May 13, 2005 Wisconsin leads in binge
drinking, The Chicago Tribune, Associated Press,
February 23, 2005, citing a 2005 Harvard School
of Public Health and the U.S. Centers for Disease
Control and Prevention study U.S. Substance
Abuse and Mental Health Services Administration,
2007 Factbook on State Beer Taxes, Center for
Science in the Public Interest Alcohol Policies
Project, July 2004 2001 Wisconsin Alcohol
Traffic Facts Book, Wisconsin Department of
Transportation
3
We drink and drive and die

• We are tied for 2nd (with Delaware) for the
  highest percentage of driver fatalities in which
  blood alcohol concentrations exceed .08
• Only Montana is worse
• We are tied for 5th for the highest percentage of
  driver fatalities in which blood alcohol
  concentrations exceed .01

Traffic Safety Facts 2005 Data Alcohol, NHTSAs
National Center for Statistics and Analysis,
Washington, DC
4
Alcohol and Crime in Wisconsin

• 2006 Violations
• 35,259 OWIs (Operating While Intoxicated)
• 8,546 PACs (Prohibited Alcohol Content)
• 456 OWIs Causing Injury
• 29 OWIs Negligent Homicide
• 99 OWIs in a Commercial Vehicle
• 44,394 Total (including 5 related charges)
• 37 out of every dollar of an alcohol citation is
  not collected
• 2005 Fatalities and Injuries (last year for
  available statistics)
• 369 alcohol-related driving fatalities
• 5,992 alcohol-related driving injuries
• Alcohol was related to the crimes of about half
  our 22,000 prisoners
• 70 of our 22,000 prisoners require alcohol or
  other substance abuse treatment

Wisconsin Department of Transportation,
2007 Wisconsin Department of Corrections, 2007
5
What about underage drinking deaths?

• The National Safety Board
• and the
• Coalition to End Needless Death on our Roadways
  (a physician group)
• listed Wisconsin in 2006 among their Fatal
  Fifteen states with the highest underage
  drinking death rates
• Wisconsin is among 10 states on the list for the
  third consecutive year

6
In 2005, almost 63,300 Wisconsin residents
received publicly funded substance abuse
treatment ? the great majority for alcohol abuse
Wisconsin Department of Health and Family
Services, 2007
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Beer is the alcoholic drink most abused

• 60 of all beer is consumed in amounts of five or
  more drinks per day
• Beer is the drink of choice in most cases of
  heavy drinking, binge drinking, drunk driving and
  underage drinking
• It is the drink most commonly consumed by people
  stopped for impaired driving or involved in
  alcohol-related crashes
• Beer accounts for 81 of all alcohol that is
  drunk in hazardous amounts in the U.S.

Greenfield, T.K. Rogers, J.D. (1999). Who
drinks most of the alcohol in the U.S.? The
policy implications, Journal of Studies on
Alcohol. 60. Rogers, J.D., Greenfield T.K. Beer
drinking accounts for most of the hazardous
alcohol consumption reported in the United
States, Journal of Studies on Alcohol. 60(6)
732-9, 1999 Insurance Institute for Highway
Safety. QA Alcohol General. Arlington, VA
National Highway Insurance Institute for Highway
Safety, June 2003
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According to the UW Police

• 41 of all academic problems stem from alcohol
  abuse
• 28 who drop out of school may do so because of
  alcohol
• 70 of violent behavior (fights, rapes) on campus
  results from alcohol abuse
• 59 of fatal falls are related to alcohol
• 50 of all traffic fatalities are related to
  alcohol
• 70 of attempted suicides are alcohol-related

http//www.uwpd.wisc.edu/pamphlets/Alcohol.pdf
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Alcohol is directly related to rape

• 26 of the men who acknowledged committing sexual
  assault on a date reported being intoxicated at
  the time of the assault
• 21 of the college women who experienced sexual
  aggression on a date were intoxicated at the time
  of the assault
• 4.7 of college women report being raped
• 72 of the victims experienced rape while
  intoxicated

"Acquaintance Rape and Alcohol Consumption on
College Campuses," by Antonia Abbey, PhD, Journal
of American College Health. Vol. 39, January 1991
Correlates of Rape while Intoxicated in a
National Sample of College Women, J. Stud.
Alcohol 65 37-45, 2004
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Alcohol is increasingly tied to child abuse and
domestic violence

• Adult alcohol abuse contributes to 50 of
  reported instances of marital violence and 35 to
  70 of child abuse cases
• Another study shows that the percentage of
  batterers who are under the influence of alcohol
  when they assault their partners ranges from 48
  to 87, with most research indicating a 60 to
  70 rate of alcohol abuse
• 92 of domestic abuse assailants reported use of
  alcohol or other drugs on the day of the assault
• An estimated 480,000 children are mistreated each
  year by a caretaker with alcohol or other drug
  problems

• Adger H Jr, Problems of alcohol and other drug
  use and abuse in adolescents, J Adolesc Health
  1991 12606-613
• The Relationship Between Parental Alcohol or
  Other Drug Problems Child Maltreatment,
  National Committee to Prevent Child Abuse (312)
  663-3520
• Roberts, A. R. (1987). Psychosocial
  characteristics of batterers A study of 234 men
  charged with domestic violence offenses. Journal
  of Family Violence, 2 (1), 81-93.
• Bijur, P.E., M. Kurzon, M.D. Overpeck, and P.C.
  Scheidt. 1992. Parental alcohol use, problem
  drinking and child injuries, Journal of the
  American Medical Association 233166-3171
• Collaboration, coordination and cooperation
  helping children affected by parental addiction
  and family violence. New York Children of
  Alcoholics Foundation, Children of Alcoholics
  Foundation, Inc. 1996

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How much beer does Wisconsin consume?
4th

• Wisconsin ranks highest per-capita for
  alcohol consumption from beer
• The average Wisconsinite consumes 1.52 gallons of
  pure ethanol annually from beer
• Only , and
  rank higher
• Wisconsin ranks highest per-capita for
  alcohol consumption from all alcoholic beverages
• Beaten only by and

Montana
Nevada
New Hampshire
3rd
New Hampshire
Nevada
National Institute on Alcohol Abuse and
Alcoholism, Surveillance Report 78 Apparent Per
Capita Alcohol Consumption National, State, and
Regional Trends, 1977-2004, August 2006
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Is the beer industry innocent?

• For 2001 consumer expenditures for alcohol
  nationally (the last year for available data)
• 17.5 went to underage drinking (22.5 billion)
• 20.1 went to adult pathological drinking (25.8
  billion)
• 37.6 of alcohol (by cost) was misused or
  illegally consumed
• A 1999 analysis showed that 50.1 (by volume) is
  misused or illegally consumed (56.9 billion)
• The alcohol industry is
  upon underage and pathological drinking

financially dependent
The Commercial Value of Underage and
Pathological Drinking to the Alcohol Industry,
The National Center on Addiction and Substance
Abuse at Columbia University, May 2006 Alcohol
consumption and expenditures for underage
drinking and about excessive drinking, The
National Center on Addiction and Substance Abuse
at Columbia University, February 26, 2003
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The Berceau Proposal
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What does the Berceau proposal mean in terms of
the cost of a beer?

• The average price of a 12 oz. bottle of domestic
  beer in Wisconsin is 0.985
• For a bottle of imported beer 1.20
• For a bottle of craft beer 1.08
• The Wisconsin beer tax accounts for 0.006 of
  that price
• The Berceau proposal would add only to
  each
• A 2.4 increase for a domestic beer
• A 2 increase for an imported beer
• A 2.2 increase for a craft beer

2.4
Scott Stenger, lobbyist for the Miller Brewing
Company
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What does this mean for the heavy drinker?

• Under the Current State Beer Tax
• If you drink
• by the end of the week
• you will have paid in state tax
• Under Rep. Berceaus Proposal
• If you drink a six-pack a day
• by the end of the week
• it will cost you an additional

a six-pack a day
25
1
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Beer tax revenue has dwindled

• The state beer tax has not been raised since 1969
  the year that Neil Armstrong walked on the Moon
• It has lost 82 of its value due to inflation
• If adjusted for inflation, beer would be taxed at
  over 10 a barrel, instead of 2 currently
• Rep. Berceaus proposed 8 increase per barrel
  would raise million annually

40
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How much do we collect?

• Wisconsin residents pay about 3.6 per six-pack
  (2.00 a barrel)
• The Wisconsin state beer tax raised 9.76 million
  in FY2005-06
• Its estimated to raise only 9.4 million in
  FY2007-08

Wisconsin Legislative Fiscal Bureau,
Informational Paper 8 Alcohol and Tobacco
Taxes, January 2007
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Wisconsins beer tax in context

• Wisconsin has the third lowest beer tax in the
  nation (6.5 per gallon)
• (headquarters of Miller Brewing Co.)
• Second Lowest Missouri (6.0 per gallon)
• (headquarters of Anheuser-Busch)
• Lowest Wyoming (1.9 per gallon)

Wisconsin Legislative Fiscal Bureau,
Informational Paper 8 Alcohol and Tobacco
Taxes, January 2007
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Our neighboring states charge two to three times
more

• Illinois 19 per gallon
• Minnesota 15
• Indiana 12
• Michigan 20

Wisconsin Legislative Fiscal Bureau,
Informational Paper 8 Alcohol and Tobacco
Taxes, January 2007
20
Other states charge much more

• Alaska per gallon
• Hawaii
• South Carolina
• New Mexico
• Oklahoma

1.07
93
77
41
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Wisconsin Legislative Fiscal Bureau,
Informational Paper 8 Alcohol and Tobacco
Taxes, January 2007
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Most beer produced in WI is not taxed at all!

• Wisconsin beer producers have two major tax
  breaks
• Beer produced in Wisconsin that is exported
  elsewhere is exempt from the WI beer tax
• Producers that brew less than 300,000 barrels a
  year, pay only half of the tax on the first
  50,000 barrels
• Wisconsin produced 8.5 million barrels of beer in
  2006
• We exported 5.9 million barrels (69), all
  from WI taxation
• The remaining 2.6 million barrels were taxed, and
  consumed in-state
• So, only of the beer produced in
  Wisconsin was subject to the WI beer tax
• Only 26 was taxed at the 100 rate

exempt
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Wisconsin Department of Revenue, 2007
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Most Wisconsin beer producers pay only half of
our tax

• There were 66 Wisconsin Beer Producers in 2006
• 61 were taxed at the 50 beer tax rate (92)
• 4 were taxed at a combination of the 100 and 50
  rate (6)
• 1 was taxed entirely at the 100 rate (2)
• The top four Leinenkugel, Miller, Pabst and
  Mikes Lemonade account for 95 of all revenue
  from in-state producers
• Miller alone accounts for 77 of all in-state
  producer beer tax revenue

Wisconsin Department of Revenue, 2007
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Most Wisconsin beer producers pay little in taxes

• Between 0-100 14 breweries
• Between 100-1,000 28 breweries
• Between 1,000-5,000 10 breweries
• Between 5,000-10,000 3 breweries
• Between 10,000-30,000 4 breweries
• Between 30,000-50,000 2 breweries
• Between 50,000-100,000 1 brewery
• Between 100,000-1,000,000 3 breweries
• Over 1,000,000 1 brewery (Miller)

Wisconsin Department of Revenue, 2007
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How does the beer tax compare to other Wisconsin
taxes
and their increases?
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Seven increases since 1980!
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Increases Almost Every Year Since 1983!
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No increase in 37 years!
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QuizHow many six-packs must be sold to produce
the same state excise tax revenue generated by
one carton of cigarettes?

• 210

R. J. Reynolds Company
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Arguments against increasing the Wisconsin beer
tax, and our responses
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The beer tax is paid by those who consume beer
regardless of their income
Argument 1

• It is a regressive tax

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Our Response
A

• All sales taxes, fees and fines are regressive as
  a matter of practice. Only income and property
  taxes are consciously progressively structured.
  For example
• Hunting and fishing licenses are paid by those
  who hunt and fish, regardless of income
• Drivers license and license plate fees are paid
  by those who drive, regardless of income
• It is a generally accepted concept of fairness
  that those who participate in an activity should
  help shoulder the costs that activity incurs
• Are the opponents of the beer tax advocating a
  major re-write of our tax code to make all taxes,
  fees and fines progressive?
• I dont think so

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Our Response
B
is

• The beer tax progressively structured when
  considering family expenditures
• A 1990 Congressional Budget report stated that
  to the extent that family expenditures rather
  than family income better reflect lifetime
  income, expenditures on alcohol are progressive.

U.S. Congressional Budget Office. Federal
Taxation of Tobacco, Alcoholic Beverages, and
Motor Fuels. A CBO Study. Washington, D.C., 1990.
33
Argument 2

• Beer is a blue-collar drink
• The beer tax hits average working people of
  modest means hardest, because they drink the most
  beer

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Our Response
A
False

• Beer consumption is approximately evenly split
  across upper and lower income levels

Adams Beer Handbook, 2003
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In fact, beer is consumed somewhat more by the
upper classes

• People earning 50,000 or less consume 39 of the
  regular beer in the U.S.
• While those earning 75,000 or more drink 41 of
  the regular beer
• For light and imported beer lower income people
  (making 30,000 or less) are 11 to 53 less
  likely than upper income people to drink these
  types of beer

Adams Beer Handbook, 2003
36
60 of regular beer consumers earn incomes of
50,000 or more

• While, Wisconsins median household income is
  only about 46,000

Adams Beer Handbook, 2003
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Alcohol, in general, is used across the board

• The same 1990 Congressional Budget Office report
  found that expenditures on alcohol represented
  similar percentages of total family expenditures
  across income classes.
• Indeed, the budget share for alcoholic beverages
  actually rises with adjusted family income.

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Our Response
B

• The average drinker will not bear the brunt of a
  beer tax increase

39
Beer producers are not so concerned with the
average drinker

• They know that most of their revenues come from
  heavy drinkers

price-insensitive
40
The heaviest drinking 10 of beer drinkers
consume a whopping of reported beer
consumption
43
Greenfield, T.K. Rogers, J.D. (1999). Who
drinks most of the alcohol in the U.S.? The
policy implications, Journal of Studies on
Alcohol. 60.
41
of drinkers consume of all
beer!
20
85
Greenfield, T.K. Rogers, J.D. (1999). Who
drinks most of the alcohol in the U.S.? The
policy implications, Journal of Studies on
Alcohol. 60.
42
The moderate-drinking majority of drinkers
consumes, on average, relatively little
alcoholand pays a
amount of alcohol taxes
negligible
43

• Besides . The average price of beer has fallen
  by more than 25 relative to the Consumer Price
  Index over the past half-century

Fact Sheet About Beer Taxes, Center for Science
in the Public Interest Alcohol Policies Project
44
Heavy and addicted drinkers who account for
most of the beer consumption in the U.S.
rightly pay most in beer taxes, since their
drinking
imposes the greatest cost to society
45
If a per bottle tax increase will cause
you financial burden
2.4

• . You have worse problems to deal with than the
  beer tax

46
Argument 3

• A beer tax will hurt economic development and
  cost jobs in Wisconsin

47
Our Response

• Claims of job loss are not supported by the
  evidence
• Between 1990 and 2000, beer industry wholesale
  trade employment by more than 8,000 jobs
  nationally
• Including increases between 1990 and 1992 a
  year before and after the last federal beer tax
  increase!
• an increase that was that
  proposed by Rep. Berceau

rose
almost equal to
Alcohol Policies Project of the Center for
Science in the Public Interest, citing Bureau of
Labor Statistics of the U.S. Department of Labor
48
Beer Lobbyists Tell Us That the Industry Provides
Plenty of Jobs We Dont Disagree
Social Workers
Coroners
Ambulance Drivers
Emergency Medical Technicians
Hospital Trauma Teams
Tow Truck Drivers
Court Commissioners
Prison Guards
Police Officers
AODA Counselors
Judges
Collection Agencies
Insurance Adjusters
Jailers
Physical Therapists
Plastic Surgeons
Psychiatrists
Marriage Counselors
Repossession Agencies
Firefighters
Auto Body Shops
Academic Counselors
Bailiffs
Funeral Directors
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Consider the effects of that federal beer tax
increase of 1991

• Economists at the National Bureau of Economic
  Research estimate that the 1991 increase in the
  federal beer tax saves more than 600 young lives
  in alcohol-related crashes each year
• In the two years following the increase, syphilis
  rates fell nearly 40 and gonorrhea rates
  declined nearly 30, attributable to the tax

Grossman, M., Chaloupka, F. J., Saffer, H.,
Laixuthai, A. (1994) Effects of alcohol price
policy on youth A summary of economic research.
Journal of Research on Adolescence, 4(2)
347-364. Chesson, H., Harrison, P. Kassler,
W.J. (200). Sex under the influence The effect
of alcohol policy on sexually transmitted disease
rates in the United States. Journal of law and
Economics. XLIII215-238.
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Argument 4

• A beer tax increase will cause businesses to move
  to more tax-friendly states

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Our Response

• Since Wisconsin has the third lowest beer tax
• the Wisconsin brewing industry is left with
  or to move to.

?
?
Wyoming
Missouri
52
Argument 5

• The cost of alcohol treatment programs should be
  shared by all taxpayers not borne solely by
  those who can least afford it
• A beer tax penalizes the responsible consumer

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Our Response
Who

• do you think is paying for Wisconsins
  100 million treatment budget now?
• All Wisconsin taxpayers
• Drinkers and non-drinkers alike
• Those who can and cant afford it
• Everyone is currently paying for the costs
  incurred by a minority of
• Is this fair?

excessive drinkers
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What are the costs?

• The 9.7 million raised by the state beer tax
  last year covered only a fraction of treatment
  costs
• That doesnt even include the 825 million in
  annual alcohol-related heathcare costs that get
  passed along to Wisconsin taxpayers
• It doesnt count the estimated 2.7 billion in
• Policing and court costs
• Incarceration costs
• Traffic crash costs
• Lost productivity costs
• Academic failure costs
• Premature death costs

ALL ALCOHOL-RELATED
Center for Science in the Public Interest
Alcohol Policies Project, Handbook on State Beer
Taxes, August 2004 Gogek, Jim, Taxing the
Binge, The New York Times, 3/13/03 National
Institute on Alcohol Abuse and Alcoholism.
(2000). 10th Special Report to the U.S. Congress
on Alcohol and Health. Chapter 6. NIH Publication
No. 00-1583. Rockville, MD U.S. Department of
Health and Human Services.
55
What is the average cost for you?

• Each Wisconsin resident pays only 1.82 a year in
  beer taxes
• But also 18.64 in alcohol treatment costs
• and in alcohol-related healthcare
  costs (86 specifically from beer)
• and in alcohol-related criminal
  justice and societal costs

154
500
Center for Science in the Public Interest
Alcohol Policies Project, Handbook on State Beer
Taxes, August 2004 Gogek, Jim, Taxing the
Binge, The New York Times, 3/13/03 National
Institute on Alcohol Abuse and Alcoholism. (200).
10th Special Report to the U.S. Congress on
Alcohol and Health. Chapter 6. NIH Publication
No. 00-1583. Rockville, MD U.S. Department of
Health and Human Services.
56
Pop Quiz

• How much does it cost to clean up after an
  alcohol-related traffic crash in Wisconsin?
• An estimated 56,000

Michael Rothschild, Reducing Driving After
Excessive Drinking A Social Marketing Approach,
Center for Injury Research and Control,
University of Pittsburgh, 2004
57
How expensive is alcohol abuse nationally?

• Alcohol abuse and addiction cost the nation an
  estimated 220 billion in 2005
• more than cancer (196 billion)
• and more than obesity (133 billion)

The Commercial Value of Underage and
Pathological Drinking to the Alcohol Industry,
The National Center on Addiction and Substance
Abuse at Columbia University, May 2006
58
Which states earmark the beer tax for alcohol
treatment?

• Arizona Drug and Alcohol Treatment Fund
• Idaho Alcoholism Treatment Account
• Kansas Community Alcoholism and Intoxication
  Programs Fund
• Mississippi Alcoholism Treatment and
  Rehabilitation Fund
• Montana Treatment, rehabilitation, and prevention
  of alcoholism and chemical dependency
• New Jersey Alcohol Education, Rehabilitation,
  and Enforcement Fund
• Nevada Increase services for prevention and
  treatment of alcoholism and alcohol abuse
• Oregon Mental Health, Alcoholism and Drug
  Services Account
• Tennessee To assist municipalities and counties
  in carrying out the provisions of the states
  1973 Comprehensive Alcohol and Drug Treatment
  Act
• Utah Programs or projects related to prevention,
  treatment, detection, and prosecution

Center for Science in the Public Interest
Alcohol Policies Project, Handbook on State Beer
Taxes, August 2004
59
Some positive unintended consequences of raising
the beer tax

• For every 1 increase in the price of beer, the
  traffic fatality rate declines by 0.9 (Ruhm,
  1996)
• The Centers for Disease Control and Prevention
  found that a beer-tax increase of 20 per
  six-pack would reduce gonorrhea rates by 8.9 and
  syphilis rates by 32.7 (Chesson et al, 2000)
• A 10 increase in beer excise tax would reduce
  the probability of child abuse by 1.2, while
  reducing the probability of severe child abuse by
  2.1 saving 132,500 in the U.S. (Markowitz
  and Grossman, 1988)
• A 10 increase in beer taxes would reduce the
  overall number of students involved in some sort
  of violent behavior by about 4 (Grossman and
  Markowitz, 2001)
• If the alcohol in beer were taxed at the same
  rate as alcohol in distilled spirits, the number
  of fatalities among 18 to 20 year-olds in traffic
  crashes would decrease by 21 (Grossman,
  Chaloupka, 1994)
• Higher beer taxes lead to significant reductions
  in crime, particularly under 21 (Staffer, 2001)