I guess I am a little bothered by the proposal to double the alcohol tax in Indiana, right on the heels of a big increase in the federal cigarette tax.
(For the record, I quit smoking 21 years ago. I've bummed a few smokes since then, but I haven't bought any. I am a social consumer of hooch.)Now, I fully understand the concept of sin taxes. Lawmakers can always justify taxes on things like booze, tobacco and gambling. They say that taxing these things may discourage people from using them and that's a good thing.
That sounds great, but let's be honest for a moment. When lawmakers raise taxes on cigarettes, for example, they don't want everybody to quit smoking. The tax would be a bust. There wouldn't be any revenue to collect if everybody quit.
No, lawmakers know that most people will just suck it up and pay the tax. They won't stop buying booze, smokes and lottery tickets no matter how much the tax is.
So it's more than a little disingenuous when lawmakers tell us they are doing us a favor with all these sin taxes.
Actually, the truth of the matter is quite the contrary.
Take the cig tax that went into effect this week. It directly affects low-income people a lot more than anyone else.
A. Because it eats up more of their already-meager income and ...
B. Because a lot more low-income people smoke than do rich people.
Lawmakers know this and made the conscious decision to punish the approximately 20 percent of the population who smoke.
And by the way, what happened to that "no-tax-increase-on-anybody-who-makes-less-than-$250,000" pledge of Obama's?
Here's the quote:
"I can make a firm pledge ... Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes ... you will not see any of your taxes increase one single dime."
So then he signs onto a tax aimed squarely at low-income people. Oh well.
But I digress.
The thing that bothers me about the proposal before the Indiana legislature with regard to the alcohol tax is the fact that they're doing it to bail out the financially struggling group that runs the pro sports stadiums in Indianapolis.
That's right.
The Indianapolis Capital Improvements Board expects to be about $47 million short in running the home of the Colts, Lucas Oil Stadium; the home of the Pacers, Conseco Fieldhouse; the home of the minor league Indians, Victory Field; and the Indiana Convention Center.
Huh? How does that happen? Seriously, I thought the whole point of spending $900 million on a new stadium for the Colts was so they could make more money. More luxury boxes. More suites. Hmm, guess not.
The legislation passed out of committee Thursday on a 10-2 vote and now moves to the full state senate for consideration. It would double the alcohol tax statewide. Indianapolis would use its share of $8 million toward the CIB.
Right now, Indiana alcohol taxes are set at $2.68 per gallon of liquor, 47 cents per gallon of wine and 12 cents per gallon of beer.
So let's think about that for a moment.
There are 288 ounces in a case of beer. That's 2.25 gallons. So the tax on a case of beer will go from 27 cents to 54 cents. That's only a little more than a penny per can, which doesn't sound like that big a deal.
But if you're a bar owner, and the price of a case of beer goes up, you are likely to raise your prices.
Now, are you going to raise your prices from, say $2.50 a can to $2.51. No, you're going to go from $2.50 to $2.75.
Same with a shot of booze in a mixed drink.
So the Distilled Spirits Council Chief Economist says the proposed tax increase would cause Indiana retail sales to decline by nearly $100 million and destroy approximately 1,700 Indiana hospitality sector jobs in the process.
This prompted Distilled Spirits Council Vice President Dale Szyndrowski to say, "In the depths of one of the worst recessions in history, I can't think of a worse time for Indiana politicians to punish the hospitality industry - the cornerstone of the economy - with higher alcohol taxes. ... Legislators should be working to protect Indiana jobs, not forcing hundreds of people out of work with misguided tax hikes. ... Policymakers need to understand that a tax on alcohol is a tax on the entire hospitality industry - negatively impacting restaurants, hotels, bars, nightclubs and liquor stores, and the thousands of men and women they employ. When the state hospitality industry is already struggling, this is the wrong time, the wrong tax and the wrong people to punish with increased alcohol taxes."
Good point.
To be fair, alcohol taxes aren't the only way they plan to bailout the sports guys. Here's the rest of the plan.
• Money saved through CIB cuts - $10 million
• Money from NFL Indianapolis Colts - $5 million
• Money from NBA Indiana Pacers - $5 million
• Doubling alcohol taxes statewide and using Indianapolis' share toward CIB - $8 million
• Allowing Indianapolis to capture state sales taxes from a new downtown hotel - $6 million
• Increasing Indianapolis ticket tax from 6 percent to 10 percent - $6 million
• Increasing Indianapolis food and beverage tax by .25 percent, from 2 percent to 2.25 percent - $5 million
• Increasing Indianapolis hotel tax from 8 percent to 9 percent - $4 million
That's a lot of taxing.
And interestingly, as of Friday afternoon, Colts and Pacers execs hadn't yet agreed to pony up the $5 million each. Guess they can't afford it.
I guess I just don't see the wisdom of doubling the booze tax across the whole state because the Indianapolis CIB is losing money.
