The 21st century Octopus
What would you do if somebody would come to your house, burn it down to the
ground (imagine your have no insurance), and then give you $1000 for it and leave? Let
me guess! You would be angry, get involved, sue that person, etc., you will do anything
in your power and exercise your rights to solve your problem. That is great, except one
thing: everything you will do, Californians do not. This is what happens in California:
Welcome to California! California has a $24 billion deficit. Our legislators,
together with the Governor, take forever to come up with a budget. The Golden State has
no more money for health insurance for the 940,000 poor children. California’s budget
cannot support its most fragile seniors in-home care. The $24 billion deficit threats the
existence of welfare and ends college grants (Beall). The unemployment rates increase
everyday and afterschool programs are eliminated. School funds are drastically cut and
teachers are fired. Welcome to California!
All the states in the U.S. are suffering because of the actual economic crisis, and
California is not an exception. What makes California’s economy experience a more
severe crisis is the fact that it has a deadly virus stuck in its matrix – the alcohol industry.
This industry drains California’s economy of $38 billion annually in “accidents, fatalities,
illnesses, crimes, imprisonments and property damage” (Beall). While it financially
destroys California, this industry only pays $327 million in state excise tax, which
accounts to less that 1% of its damage. The rest of 99% is paid by citizens. Every citizen
in California pays approximately $1000 yearly in taxes to cover up the $38 billion in
“harm and havoc that alcohol creates in California” (Beall). According to the Highway
Patrol, 20% of car insurance premium accounts for alcohol related accidents. Services for
one person born with fetal alcohol syndrome cost over $2 million per year (Beall). While
the alcohol industry massacres the economy it also kills myriad people. Every 16 minutes
in California someone is killed or injured on highways and streets in alcohol related
accidents. All the numbers above prove the parasitic nature of the alcohol industry for
California; thus, it would be expected for this industry to be heavily taxed. Shockingly, it
is not. In California excise taxes on wine and beer are among the lowest in the U.S. In
California, beer and wine are taxed at 20 cents a gallon and spirits are taxed at $3.30 a
gallon while the national average is 25 cents a gallon for beer, 79 cents a gallon for wine
and $3.97 a gallon for spirits. The last time it had its taxes raised was in 1991 (Beall). In
order for alcohol tax to keep pace with inflation, it would need to increase by 55%(Beall).
“The [alcohol] industry must start paying its fair share for the problems it causes,”
said Assembly Member Jim Beall. In April 2009, Beall authored the Alcohol Related
Services (“ARS”) Act known as AB1019. AB1019 is a mitigation fee, not a tax, assessed
on alcoholic drinks such as beer, wine and spirits. It requires merchants “located within
the state of California who distribute alcoholic beverages to retailers for consumption in
state to pay 10 cents per drink surcharge”(Beall). This fee breaks down to approximately
10 cents per drink for a 12-ounce serving of beer; 1.5 ounces of distilled spirits; and 5
ounces of wine (Sacramento Business Journal). AB1019 will generate about $1.4 billion
in revenue for the state of California. Beall specified in AB1019’s fact sheet that is the
State Board of Equalization’s responsibility to administer and collect this surcharge. This
bill would pay for “Treatment and Recovery; Prevention, Education and Research;
Emergency Room and Trauma; Hospitalization; and Criminal Justice and
Enforcement”(Beall).
People often wonder if this fee will hurt California businesses during the actual
economic crisis, but the answer is “no.” The alcohol industry will oppose this bill, falsely
claiming job losses as a result of the 10 cent fee. However, according to the Marin
Institute, there is no evidence to support the industry’s embellished claim. In fact, after
the last federal alcohol tax increase in 1991, the Bureau of Labor Statistics of the U.S.
Department on Labor reported that beer-industry wholesale trade employment increased
by 8,000 jobs (Marin Institute). Furthermore, the extra revenue created by the 10 cent fee
($1.4 billion) will conclude in “numerous additional jobs, in healthcare and other much-
needed services”(Marin Institute). Also, AB1019 bill is a mitigation fee on industry; it is
not an excise tax or consumer based sales tax. Therefore, it is completely up to the
industry to decide if they wish to pass the cost of the fee to consumers or support it
themselves (Marin Institute). If the industry does pass the fee along its consumers, it
would mainly affect the heavy drinkers who cause most of the problems. “An additional
levy on alcoholic beverages equivalent to 10 cent per drink is a fair and appropriate way
to reduce alcohol’s staggering burden on all California’s citizens”(Beall). While all
California citizens pay for the cost of alcohol industry’s harm, 67% of alcohol sold in
California is consumed by 11% of its population (Beall).
According to the ARS Act of 2009 fact sheet, AB1019 implies a fee program
under the police powers of the state, and is not an alcohol tax. Thus, only a majority vote
of both houses together with the Governor’s signature is required for this bill to pass and
still, AB1019 did not pass. Unfortunately, AB1019 only obtained 15.8% of the votes. Out
of 19 committee members, only 3 voted “yes” on this bill. 7 legislators voted “no” while
the rest of 9 walked out without voting (California Restaurant Association). According to
the Marin Institute, 85% of California residents including voters, democrats,
independents, republicans and the Governor support this bill. It is obvious that
California’s representative democracy does not work. Our legislators do not care about
the wishes of their constituents and do not represent the wishes of their constituents.
Considering the facts that the alcohol industry drains our economy, which is on the brink
of destruction, and that AB 1019 would generate one-point-four billion dollars in revenue
for California and is supported by 85% of California’s population and the Governor, what
could compel our legislators to walk out or vote against such a budget saving bill? The
answer is the Alcohol Industry!
“We are able to tie alcohol lobby money to key legislators, especially those
members who sit in Senate Assembly Committees on Government Organizations, the
gate keepers for alcohol legislation in state. The alcohol industry gets the most bang for
its buck by targeting key legislators who can do Big Alcohol’s bidding by killing bills
that would protect the public’s health,” says Michele Simon, research and policy director
for the Marin Institute. The alcohol industry lobby has a strong history of annihilating
practically all of the bills against alcohol. Alcohol corporations practice political
spending of millions of dollars in California (Marin Institute). They “donate” money to
our legislators for their campaigns and then expect favors in return. In 2006, the alcohol
lobby spent approximately $3 million to influence legislators on bills affecting wine, beer
and liquor sales (Marin Institute). Even California’s own Arnold Schwarzenegger
received $370,096 in campaign contributions from alcohol corporations in 2006 (Marin
Institute). Because the alcohol industry sponsors our legislators, the industry influences
them when creating or voting bills. California’s legislators choose to stay loyal to those
who enable them (the alcohol industry) rather than ruling in favor of their constituents.
As I am writing this essay, I received a letter from the San Diego Community
College District saying that “The California State Legislature has increased enrollment
fee from $20 to $26 per unit effective Fall 2009.” They are really quick to snatch poor
people’s money but they had not asked for an extra cent from the alcohol industry since
1991. This has got to stop. An industry, whatever the industry may be, needs to be
beneficial to the state it resides in. The alcohol industry, not only is not helpful for
California, but it also massacres its economy.
Has history not taught us anything? The alcohol industry’s cartel over our
legislature resembles the railroad industry’s cartel over California’s legislators in the
1880’s. The railroad industry or, as the novelist Frank Norris called it, “The Octopus,”
enabled legislators in state and local offices through its control of both Republican and
Democratic political parties. Because the railroad industry sponsored them, the legislators
set favorable taxes for the railroad and ensured a hands-off policy by state government
(Gerston and Christensen).
Are we going to allow the alcohol industry to be the new “Octopus” of the 21st
century? Have we forgot that democracy means “power to the people”? Have we forgot
about the other part of California’s democracy called “direct democracy” which gives the
people the power to take actions? What is the purpose of having power if we do not
exercise it? Are you not tired of seeing your kids die everyday because of alcohol related
accidents, which is the number 1 cause of death among teenagers? Of course your answer
will be “yes!”, but your actions speak otherwise. I am not writing this essay for my
health, or because I feel like complaining and criticizing everybody for our problems, but
because this issue is still in effect. There is still a chance for us to stop history from
repeating itself. AB1019 will be voted on again in February 2010. The citizens of
California need to call their local legislators and hold them responsible for their actions.
Ask for explanations and more important, ask them to vote “YES” on AB1019.
