Tax proposed on alcohol to help fund health insurance for all

WASHINGTON — Joe Six-Pack may have to hand over nearly $2 more for a case of beer to help provide health insurance for all.

Details of the proposed beer tax are described in a Senate Finance Committee document distributed to lawmakers before a closed-door meeting Wednesday. Senators are focusing on how to pay for expanding health insurance for an estimated 50 million uninsured Americans, a cost that could range to some $1.5 trillion over 10 years.

You can't raise that from beer money alone.

Lawmakers are looking at an extensive list of spending cuts and tax increases, including a new levy on the value of job-based health insurance. The latter proposal seems to be gaining ground. It could lead to higher income taxes for some people with particularly generous job-based health care.

No decisions were expected at the meeting, but Senate Finance Committee chairman Max Baucus, D-Mont., will use the feedback to shape legislation he intends to introduce in the next few weeks.

Whereas many of the revenue-raisers involve obscure provisions of federal law, most consumers can relate to a beer tax.

Taxes on wine and liquor would also go up.

And there might be a new tax on soda and other sugary drinks blamed for contributing to obesity. A tax of 3 cents per 12-ounce drink would raise about $50 billion over 10 years, according to congressional estimates. Diet drinks, however, wouldn't be taxed.

The idea behind the proposed increases is to tax lifestyle choices that contribute to rising medical costs. Obesity puts people at risk for diabetes and heart problems. Alcohol abuse is a risk factor in several types of cancer, liver disease and psychological problems.

The soft drink industry and beer and wine producers are lobbying to stop the proposals before they gain traction. The tax increases would lead to job losses for workers and higher costs for recession-weary consumers, the industries say. Winemakers also point to studies that suggest a glass a day can be good for health.

"Singling out wine for higher taxes to reform health care is misguided because wine is part of a healthy diet and lifestyle for millions of Americans," said Robert P. Koch, president of the Wine Institute, which represents California's industry.

Under the proposal, beer taxes would be increased by 48 cents a six-pack, from the current 33 cents. Beer is still the favorite choice of Americans who drink alcohol.

Wine taxes would rise by 49 cents per bottle, from the current 21 cents.

And the tax on liquor would increase by 40 cents per fifth, from $2.14 currently.

Percentage-wise, wine drinkers would take the biggest hit, a 233 percent tax increase per bottle.

Liquor would see the smallest proportional increase, 19 percent a fifth. The beer tax would rise by 145 percent per six-pack.

Proponents of the idea say it would equalize the tax treatment of alcoholic drinks, by charging the same tax rate based on alcohol content to all. But that would put an end to the current tax advantage enjoyed by beer and wine.

The higher alcohol taxes would bring in nearly $60 billion over 10 years.

Tax proposed on alcohol to help fund health insurance for all 05/20/09 [Last modified: Wednesday, May 20, 2009 5:39pm]

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