A key Senate committee tentatively approved a new 10 cents per drink tax on all alcoholic beverages Thursday, a move that would net the state an estimated $ 62 million a year.
The Senate Committee on Commerce and Consumer Protection unanimously approved Senate Law 1232, which aims to introduce the new tax from July 1 and end the tax on June 30, 2024.
The measure was rejected by the Hawaii Food Industry Association, which argued that “this surcharge is an additional tax on companies selling alcohol, many of whom are already struggling,” during the pandemic.
Tim Lyons, lobbyist for Anheuser Busch Cos., Was also against the bill, saying that alcohol sales are price-sensitive.
“History has been seen across the country as prices go up and sales go down,” Lyons said on a written testimonial. “When sales fall, unemployment rises.”
“We also don’t believe that you can oblige people to drink responsibly. People who drink in moderation have no health problems … abusive drinkers drink regardless of the cost, ”Lyons wrote.
But Cynthia Okazaki of the Hawaii Alcohol Policy Alliance said on a written testimony that it has been 22 years since the state tax on alcohol was last increased.
“This tax is paid only by those who consume alcohol and not by the public,” Okazaki wrote.
Excessive drinking can cause a variety of health and social problems, ranging from automobile accidents and violence to unplanned pregnancies and fetal alcohol disorders, according to Chelsea Gonzales, alliance coordinator for the Hawaii Alcohol Policy Alliance.
Gonzales said in a written testimony that the federal agencies for Disease Control and Prevention estimates that excessive alcohol consumption costs Hawaii nearly $ 1 billion a year.
“Alcohol doesn’t pay for itself, and it’s time we made a small change to address that,” wrote Gonzales.
The action was also supported by the Hawaii Substance Abuse Coalition, Mothers Against Drunk Driving Hawaii, the Hawaii State Teachers Association, and the Hawaii Fetal Alcohol Spectrum Disorder Action Group.
Proponents of the measure argued that increasing the cost of drinking would reduce consumption, but not all agreed.
Garrett Marrero, president of the Hawaiian Craft Brewers Guild, said there was no direct link between higher alcohol prices and lower consumption. He agreed that a higher tax would not encourage some people to drink, but warned that the measure would lead to consumption of less expensive, mass-marketed and mass-produced beverages, which would lead to mainland producers.
“This hurts the small craft brewers far more than the largest producers,” he said.
The bill won the support of the lone Senate Republican, Kurt Fevella.
He agreed that despite the timing concerns due to the slump in business, the tax was a good idea.
“They will always give a reason why we can’t move forward because everyone is hit hard, but they have taxes and are moving forward for the right reasons, our community is drinking less alcohol and our rural families are saving roads and violence” , he said.
Senate Commerce and Consumer Protection Committee Chair Rosalyn Baker said the additional revenue from the new tax was “very useful right now.”
Governor David Ige and lawmakers are grappling with a very large budget deficit caused by the sharp drop in tax revenues during the pandemic.
The measure is now being sent to the Senate Committee for Means and Ways for further examination.
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