Increasing alcohol price or tax will hurt businesses

With the gloomy look of economy, there are people who still do not understand the implications of their actions. Recently, I have been coming across ideas to increase either the price of alcohol or the taxes levied on the sale of alcoholic beverages. While it is understandable that some people want to reduce consumption through either directly hiking the prices or indirectly through raising taxes, the results will be devastating to many local operators, especially the ones already feeling the effects of the slowdown in economy.

A Hike in the Price of Booze Could Make Us All Healthier

This is what an article on alcohol prices published by Yahoo is claiming today. I am standing on the other side of the issue, as it seems pointless. The article claims that there is a known link between the cost of alcohol and how much people drink. Anybody could come to that conclusion with just about any product. The lower the cost, the higher the consumption. It took scientists to figure this one out.

Additionally, the article tries to link crime rate, spread of STDs, and mortality rate to drunk driving. While the author makes a great attempt at explaining the benefits of increase in alcohol price, I have to disagree. This is like saying, lets increase the price of vehicles so less people drive on the road. Doing so would reduce congestion on the roads, accidents, and police chases! Do you see where I am going with this or do you need more examples?

Increasing taxes on alcohol will be hurtful to local businesses

San Francisco could have an initiative on the November ballot that would increase alcohol taxes. This initiative would raise the state excise tax on a bottle of wine from 11 cents to $5.11, in addition to raising taxes across the board for other alcoholic beverages. State tax on a six-pack of beer would increase from 11 cents to $6.08! A bottle of Spirit would have the tax increased from 65 cents to $17.57. The City claims that the net result would be $7 billion to $9 billion increase in tax revenue that would support alcohol education, and prevention programs. Of course they are not accounting for the decrease in consumption from such absurdly high prices. They assume visitors and residents of San Francisco would continue to fork over money at the same rate. Alcohol consumption will be reduced by such amount that many of the businesses will not be able to afford to stay open.

In particular, bars and clubs would be the ones enduring the blunt of this decision in the form of reduced income. Many of them are already struggling to stay open in the face of sluggish economy and high taxes. The only thing increasing tax on such items as alcohol does is cause people to stop consuming. If these businesses cannot stay open, the city will lose out not only from the reduction in spending from consumers, but also from the bankruptcies of numerous bars and clubs.

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