Let’s end discrimination in the drinks market

Let’s end discrimination in the drinks market

 

Source: Rstreet.com

Kevin Kosar

May 5th

 

Everyone has heard this basic truth many times: the amount of alcohol is the same in a 1.5 ounce shot of liquor, a 4 ounce glass of wine and a 12-ounce bottle of beer. Guzzle six shots in an hour and you’ll be drunk; slurp six glasses of wine or six bottles of beer and you’ll be equally smashed. That is common sense and indisputable math.

 

So why does the government treat spirits, wines and beers differently? Consider the federal tax rates for these three drinks. The Congressional Research Service notes:

 

When converted to standard drink measures liquor drinks are generally subjected to a federal excise tax of approximately 13 cents per 1.5 ounce shot, wine is taxed at 4 cents per 5 ounce glass, and beer is taxed at 5 cents per 12 ounce can or bottle.

 

Oh, and by the way, hard apple cider is treated as a wine by law, but subjected to a tax rate much lower than the excise tax on spirits, sparkling wine or your typical red or white plonk.

 

States, for their part, have erected whole regimes premised on the notion that beer, wine and spirits are fundamentally different products. Pennsylvania allows grocery stores to sell beer, but not wine. Florida and 15 other states prohibit beer and wine stores from selling spirits, unless they are willing to open a separate storefront or “dedicated” space. Virginia insists that only government-run shops can sell spirits. Texas allows a consumer to buy beer on a Sunday, but not liquor. States also tax beer, wine and spirits at different rates, with liquor (again) being hit with the highest excise.

 

Quite frankly, none of this makes sense. What possible reason can there be for discriminating among the types of alcoholic beverages? Alcohol is alcohol.

 

One might object, that alcohols should be taxed based their level of “proof.” If that is one’s position, then there is all the more reason to abolish the whole beer versus wine versus spirits distinction.

 

Taxing categories of drink is not the same as taxing alcohol content. Consider: Campari, the popular Italian liqueur, is 48 proof (24 percent alcohol by volume). Sam Adams’ Utopia beer is nearly 60 proof (30 percent ABV). Many wines are less than 10 percent ABV (like Portuguese vinho verde) and some microbrews are more boozy. A Scottish brewer produced a beer called Armageddon that is 130 proof (65 percent alcohol by volume).

 

The alcohol levels within the drinks categories varies vastly. Dekuyper Triple Sec liqueur, which flavors margaritas, is 30 proof (15 percent ABV); Absolut vodka is 80 proof (40 percent ABV), and George T Stagg Bourbon is more than 140 proof (70 percent ABV). Sparkling wines tend to be around 24 proof (12 percent ABV), and many red wines are 28 proof (14 percent ABV). Yet federal categorizations make bubbly winemakers pay a higher tax than “still” vintners.

 

All in all, both fairness and common sense argue for abolition of a regulatory regime which discriminates among beverages. Let’s tax each alcoholic beverage based on the amount of alcohol it has per ounce or gallon, and quit creating different levels of consumer access based on the type of drink.

 

http://www.rstreet.org/2016/05/05/lets-end-discrimination-in-the-drinks-market/

 

Kevin R. Kosar, Ph.D.

Senior Fellow and Director of the Governance Project

R Street Institute