Preckwinkle tries to make the case that raising the alcohol tax is good public policy
By MARK BROWN email@example.com November 8, 2011 7:38PM
Updated: December 10, 2011 9:57AM
Cook County Board President Toni Preckwinkle has had things pretty much her way since taking over a year ago from Todd Stroger — and with good reason.
She’s kept the faith with her campaign promises to repeal an unpopular sales tax increase, reining in spending, and just as important, conveyed a new period of responsible and thoughtful leadership.
But as her second county budget heads toward a vote next week, some commissioners are looking to test the limits of her honeymoon popularity by reshaping the proposal more to their liking.
The main object of their attention is Preckwinkle’s plan to increase the county’s tax on beer, wine and liquor.
It’s a modest increase, to my thinking, amounting to less than two cents on a six-pack of beer, two to three cents on a bottle of wine and 10 cents on a fifth of the hard stuff.
Altogether, Preckwinkle estimates the alcohol tax would generate an additional $10.9 million a year in revenue, partially making up for the money the county will forgo by peeling back another quarter-cent off its sales tax this year.
But the increase comes on top of existing state, county and city alcohol taxes that already combine to make a Chicago drinker’s tax load among the highest in the country.
That has fueled a strong pushback from bars and restaurants who say the tax increase will cost them business — as customers drink less or buy their booze outside the county — and ultimately eliminate jobs.
In response, some Democratic commissioners are looking to team with the board’s four Republicans to find an alternative revenue source, or more spending cuts, to fill the hole that would be left in the budget.
Preckwinkle is sticking to her guns and making the case that raising the alcohol tax is good public policy, not just the next convenient sin tax now that governments have pushed cigarette taxes to the limit.
She argues — correctly — that alcohol consumption is a factor in driving up the cost of two of the main functions of county government: public health and public safety.
By raising the alcohol tax, she hopes to reduce alcohol consumption while recouping some of what the county pays to treat patients adversely affected by their alcohol use — and make up for part of what the county spends on courts and jails for those who commit crimes under the influence.
Her staff even directed me to a Duke University economist who contends raising alcohol taxes can reduce crime. The professor, Philip Cook, says his studies have shown that as the price goes up, alcohol use and crime go down. How? Well, for instance, a teenager can’t afford to buy that second six pack and therefore might not make a bad decision.
Cook suggests a 55-cent tax on a bottle of beer would reduce crime 6 percent. The topic is complicated by the fact alcohol is taxed by the gallon in Illinois, and the tax is imposed on wholesalers, not consumers, although obviously it gets passed along.
Just to give you an idea, though, the total alcohol tax on beer purchased in Chicago is 58 cents a gallon — 23 cents state, 29 cents city and 6 cents county.
In other words, even if you accept Cook’s thesis, the county alcohol tax increase would barely be enough to move the crime needle.
“If it’s a very small price increase, you’ll get a very small result,” Cook said. Still, he argued, “It’s going in the right direction.”
You don’t need to totally buy into that to recognize the great social cost from alcohol consumption. Unfortunately for Preckwinkle, the state and city beat the county to the punch with three alcohol tax increases since 2005, which has the hospitality industry yelping, although the offsetting sales tax reduction would make it a wash.
“I have a lot of bars and restaurants in my district. This is something they feel,” said Commissioner John Fritchey, who is trying to stop the alcohol tax increase.
Some opponents argue the proposed county increase would make total taxes on hard liquor in Chicago the highest in the nation.
Turns out that’s not true. We’re already highest in the nation for hard liquor. Nobody seemed to notice.