Boozing Battle

An initiative on the November ballot in California would raise the state tax on liquor by 65 percent, on beer by 400 percent, and on wine by 1,900 percent. The alcoholic beverage industry is not standing idly by—it's actively supporting the measure.

That's because those dramatic increases pale in comparison with the tax hikes proposed by the competing "nickel-a-drink" initiative, which would raise the per-gallon tax on liquor from $2.00 to $8.40, on beer from 4 cents to 57.5 cents, and on wine from 1 cent to $1.29 (increases of 420 percent, 1,338 percent, and 12,800 percent, respectively). Known formally as the Alcohol Tax Act of 1990, this initiative would take an estimated $720 million each year from consumers of alcoholic beverages to fund mental health services, drug- and alcohol-related law enforcement, alcohol treatment, alcohol-abuse prevention programs, and emergency services.

The industry is expected to spend some $20 million to defeat the measure. Distillers, brewers, and vintners nationwide are contributing to the effort to siphon off support from the Alcohol Tax Act. They're concerned both because of the size of the California market and because of the state's reputation as a trendsetter.

But unlike California's insurers in 1988, who pumped all their money and effort into a no-fault alternative to Proposition 103, the alcohol industry is hedging its bet. Many of the same contributors who are supporting the milder alcohol-tax initiative are also backing a tax-limitation proposal by Joel Fox of the Howard Jarvis Taxpayer Association.

The Fox measure would require a two-thirds vote, rather than a simple majority, to approve any initiative imposing special taxes for designated purposes. It would also limit such levies to 1 percent of the value of the taxed property, a condition that disqualifies the Alcohol Tax Act. If passed, the antitax measure would go into effect the day of the election, scuttling the nickel-a-drink initiative as well as two other tax hikes intended to fund antidrug efforts.

Fox hopes the November 6 election will show that last June's approval of Proposition 111, which doubled the gas tax to fund road construction and maintenance, was an aberration. Unlike the gas tax, he says, "the alcohol tax is certainly not a user fee." While everybody who buys gasoline uses public roads, few of those who enjoy a glass of white zinfandel end up in a drug treatment center or an emergency room.