Why Rebranding Sin Taxes as "Health Taxes" Doesn't Fix Anything


There's been a recent wave afoot to rename sin taxes as health taxes. R Street's Kevin Kosar writes for American Spectator about how this doesn't alleviate any of the drawbacks of using sin taxes:

Have you heard the news? So-called “sin taxes” — particularly those on alcoholic beverages — are being rebranded as “health taxes.” It’s true...

Former New York Mayor Michael Bloomberg and other public health advocates think sin taxes should be called and viewed as “health taxes.” Certain activities and products, like gambling and booze, issue “externalities” that are born by the community collectively. They say the overwhelming evidence indicates that higher taxes on alcohol and other vices will reduce excessive consumption and the associated health costs.

For sure, alcohol addiction and severe abuse is damaging. Anyone who has ever known an addict can speak to the awfulness and tragedy of it all. The same goes with compulsive gambling, which is horrifically costly.

So, what’s not to like about a sin or health tax?

Plenty. Dressing up the sin tax as a “health tax” sweeps under the rug some of the problems with this policy tool...

Read the rest of Kevin's column here.


How Does Protectionism Hurt Our Drinks?


Last weekend, R Street's Daniel DiLoreto discussed the alcohol industry's protectionist policies in the Washington Examiner. The Trump tariffs are detrimental, and many state policies have the same impact. They increase prices and stifle consumer choice:

President Trump’s tariffs are putting a dent in the good ole American six pack. This spring, craft breweries braced for impact, as additional charges on steel and aluminum are likely to make cans and bottle caps more costly to produce. “Any raise in the cost of cans will be immediately felt,” explains Justin Cox, founder of Washington, D.C.’s, Atlas Brew Works. Cox says he’ll be forced either to cut back on labor or charge consumers higher prices.

Nevertheless, while the tariffs have made national headlines for harming American industries, similarly costly state-level policies that affect alcohol have received less media attention. Like tariffs, however, state protectionism also hurts the booze industry by increasing production costs and raising prices for consumers. Consequently, while Trump’s tariffs deserve criticism, efforts to push back against protectionist policies should not be confined to the national level...

Read the whole article here.

#Actually, Beer Pitchers are Bad


Last summer, R Street’s Cameron Smith caused a stir by calling out Alabama’s interpretation of a regulation that targeted margarita pitchers. The Alabama Alcoholic Beverage Control Board was forced to backtrack, conceding that it would leave the pitchers alone.

But don’t be fooled: Unruly drink pitchers are hardly confined to Alabama. In fact, our nation’s capital was recently forced to enact an even stricter rule to control its pitcher epidemic. Thanks to some quick-thinking government officials, D.C. law now officially prohibits customers from picking up pitchers and carrying them around a restaurant.

This regulation is a great example of local government attempting to respond to one of the paramount threats of our day. In fact, the only problem we can see with D.C.’s rule is that it fails to fully appreciate just how dangerous pitchers truly are.

It all started last year when D.C.’s Alcoholic Beverage Control Board implemented a new rule declaring that bars and restaurants were allowed to offer bottle service to their customers, so long as they did not “allow any patrons to remove the bottle or pitcher from the table.”

The regulation’s purpose is to “curb the practice of patrons wandering around the establishment with large containers containing multiple servings of alcoholic beverages.” Cracking down on wandering drink containers is important, of course, because “large containers may be used as weapons during altercations.” After all, who among us hasn’t visited a restaurant and ordered a pitcher of our favorite boozy beverage, only to drown its contents and use the empty container to smack a fellow patron upside the head?

For starters, pitchers have intricately designed handles that ergonomically mold to the human hand, allowing customers to arm themselves faster than you can say: “I’ll have a pitcher of Miller Lite.” But pitchers can be weaponized in less intuitive ways, too. In addition to being useful for whacking surly bartenders, shattering a glass pitcher can create dangerous shards handy for stabbing fellow bar patrons. Large containers of alcohol can also be a fire hazard (alcohol is flammable, after all).

And don’t even get us started on spills. Every week, dozens of clumsy D.C. bar-goers order pitchers of booze only to spill their contents on their nicest Sperry Top-Siders. Spilled beer not only ruins leather shoes, it also turns dance floors into slippery skating rinks primed to trigger costly slip-and-fall lawsuits. While spillage risk is also present with pint glasses, the potential harm caused by a dropped pitcher is much more significant (to paraphrase Biggie: Mo Liquid Mo Problems).

In the end, the flaw with the ABC’s new rule is obvious: It is not concerned enough with the victims of pitcher-crime.  Ideally, we would outlaw drinking establishments altogether, as they are a clear danger to the public. However, as pragmatic advocates, we recommend one of two policy solutions for D.C.’s deficient pitcher law: Either #BanThePitcher entirely, or arm every person in every bar in the District with their own pitcher for self-defense.

If we ban pitchers completely – coupled with felony convictions and jail time for anyone found still carrying one within District limits – then we can stop pitcher-fueled bar fights and catastrophic spills before they even happen. But if a complete ban is a step too far, let’s at least fight fire with fire. We should give every policy wonk and congressional staffer in every D.C. bar his or her own pitcher to wield in self-defense. That way, the next time someone pours beer on your new Tory Burch flats, you can respond in kind by dousing them with a jug full of PBR. Not only will this bring justice to such abhorrent crimes, it will likely deter them from happening in the first place.

It’s long past time for the D.C. government to show that it cares about its citizens by escalating the war on pitchers. Remember: People don’t kill people, pitchers kill people.

C. Jarrett Dieterle is the director of commercial freedom and a senior fellow at the R Street Institute, as well as the editor of DrinksReform.org. Daniel DiLoreto is a policy intern for commercial freedom at R Street.

Why Can’t Native Americans Make Whiskey?

Image courtesy of  New York Times

Image courtesy of New York Times

R Street's Jarrett Dieterle and Kevin Kosar took to the pages of the New York Times this week to explain why Native Americans are still not allowed to distill on tribal lands. The reason traces back to an antiquated 1834 federal law, which they argue its far past time to repeal:

In 2016, the Confederated Tribes of the Chehalis Reservation, in southeastern Washington State, began selling craft spirits and beer at a restaurant in their Lucky Eagle casino. But when the Chehalis wanted to start making their own hooch, the federal government said no.

The Bureau of Indian Affairs informed the tribe that federal law prohibits the building of a distillery on tribal grounds. The Chehalis would have to continue to purchase spirits from producers off the reservation.

Small-scale distilling is a booming business, providing much-needed jobs and revenue for state and local governments. So why are Indian tribes legally prevented from joining in? ...

Read the whole piece here.



Texas Brewers Battle the Three-Tier System


Regulations in Texas that separate production, distribution, and retailing of alcohol continue to meet strong opposition from local brewers. The Wall Street Journal reports on the ongoing battles in the Lonestar State:

Small brewers are squaring off against distributors and bar owners in a fight for drinkers as craft beer’s once-explosive growth cools...

Growth is being driven entirely by direct sales from brewers to customers, mainly through taprooms and brewpubs. Direct sales last year grew by 24%—accounting for one in 12 craft beers sold— while the remainder of craft-beer sales declined, according to the Beer Institute.

Small brewers are eager to capitalize on the trend—selling direct makes for higher margins— but many distributors and bar owners are feeling shortchanged.

In response, the two sides are waging a lobbying war across the U.S. over exceptions to the post-Prohibition “three tier system” that keeps the production, distribution and retailing of alcohol separate in many states.

Learn more about this lobbying battle here.

It's time to free happy hour in Virginia!


R Street's Jarrett Dieterle and Christina Pesavento took to the pages of the Richmond Times-Dispatch to argue that Virginia's ban on happy hour advertising goes against the entire idea of happy hour! Happy hour is supposed to be fun, social, and collegial, which all runs counter to prohibiting restaurants from speaking about it. They also highlighted the Pacific Legal Foundation's recent lawsuit challenging the law on First Amendment grounds:

Everyone knows the first rule of happy hour: You have to talk about happy hour.

Unlike the 1990’s movie “Fight Club” — which exhorted participants not to talk about their activities — happy hour has long been synonymous with socializing, networking, and celebrating the end of the long workday.

But in Virginia, talking about happy hour is illegal. Believe it or not, current regulations forbid restaurants from marketing specific drink specials beyond their premises, including on social media. Violations can trigger week-long liquor license suspensions and fines of up to $500.

Fortunately, our system of government provides an important check for laws that restrict speech — the Constitution...

Read the whole piece here.

R Street's Jarrett Dieterle also previously appeared in a video with PLF's Anastasia Boden discussing Virginia's happy hour advertising ban and other crazy drinks laws from around the country.

It's time to allow booze at SEC college football games


Beer and other alcohol is ubiquitous at professional sports stadiums around the country, but less so at the college level. R Street's Marc Hyden argues that the SEC should allow booze inside its stadiums on gameday--and how doing so would ultimately be a win-win on policy grounds:

According to the old maxim, “In the South, college football isn’t just a sport. It’s a religion.” Indeed, there are few things more hallowed than Southeastern Conference (SEC) football on Saturdays and church on Sundays. In fact, Sundays in the Bible Belt were once treated the same as many of today’s college athletic stadiums, where there is a strict prohibition of general alcohol sales.

And while this issue once spanned college sports across the country, the National Collegiate Athletic Association (NCAA) has gradually loosened its restrictions. Now it appears poised to relax them even further by allowing general alcohol sales at championship events. Yet rather than following the NCAA’s lead, SEC leadership has stood firmly opposed to the liberalization of alcohol policies, leaving its 14 schools with mostly “dry” stadiums. The SEC should reverse this blanket prohibition and leave the decision up to the local authorities...

Read the rest here.

Pennsylvania might improve its dreadful drinks laws—a little


Pennsylvania's legislature is set to consider a bill that would roll back the state's recently-implemented flexible-pricing scheme for alcohol. R Street's Jarrett Dieterle has written before about how booze markups in control states function analogously to a stealth tax, and now R Street's Kevin Kosar weighs in on Pennsylvania's specific situation in an op-ed for the American Spectator:

If Rep. Jesse Topper has his way, Pennsylvania’s legislature will roll back its infamous stealth tax on drinks. Topper, a Republican representing the south-central Bedford, Franklin, and Mercer counties, has introduced H.R. 2263, which would repeal the “flexible pricing” authority given to the Pennsylvania Liquor Control Board in 2016.

Why is this good news? Well, the cheerfully named provision had the dreadful effect of enabling the state liquor officials to raise prices as they saw fit. The PLCB has a monopoly on the sale of spirits and a near monopoly on wine sales, so it can set prices without fear of price competition. And with the state legislature demanding the PCLB give it big chunks of revenue each year to fund government employees’ pensions and the like, the problem is obvious: flexible pricing is a stealth tax. Bureaucrats raise revenues for general government spending by elevating mark-ups paid by drinks consumers, sans legislative enactment. It is literally taxation without representation...

Read the rest of Kosar's op-ed here.


R Street's Jarrett Dieterle Featured in Video About America's Craziest Drinks Laws

The Pacific Legal Foundation (PLF) recently announced that it had filed a lawsuit, on behalf of Chef Geoff Tracy, challenging Virginia's ban on happy hour advertising. Virginia's happy hour ban prohibits restaurants and bars in the commonwealth from advertising drink specials--even something as innocuous as "$3 beers from 4-7pm." Geoff Tracy owns a Virginia restaurant and is arguing that Virginia's advertising ban--something he doesn't have to put up with for his nearby Maryland and DC restaurants--violates the First Amendment. R Street's alcohol policy teamed up with PLF to host a launch party for the case, and R Street's Jarrett Dieterle appeared alongside PLF attorney Anastasia Boden in a video highlighting the many ridiculous alcohol laws in America:

Virginia lawmakers have (yet another) opportunity to fix state's backwards booze laws


Virginia's antiquated distilling laws are a topic of frequent conversation around these parts, and R Street's Jarrett Dieterle has written about Virginia numerous times (see here and here, for example). The Virginia legislature now has its best opportunity in years to start reforming its backwards system, and Jarrett took to the pages of the Richmond Times-Dispatch to argue that it's far past time for state lawmakers to finally deliver:

"Virginia is one of 13 'control states' at the retail level, meaning that a government entity — in Virginia, the Department of Alcoholic Beverage Control (ABC) — is in charge of all sales of hard spirits in the state.

The Virginia ABC has become notorious for its outdated regulatory model, and any honest survey of the legal obstacles Virginia distillers face shows why.

Despite this oppressive legal regime, prior reform efforts have mostly failed to make it through the state legislature. Now, lawmakers in Richmond have their best opportunity in years to pass meaningful reform — if only they can find the courage to follow through...

ABC imposes a jaw-dropping 69 percent markup on every bottle of hard spirits sold in the state, in addition to the state’s 20 percent excise tax on liquor. When taxes and the state-imposed markup are added together, distilleries receive only 46 percent of the purchase price of every bottle of booze they sell. This gives Virginia the third-highest effective tax rate on hard spirits in the nation....

This session, the Virginia legislature has considered numerous reform bills that would overhaul the state’s backward booze system. While most failed to gain traction, at least one bill now has a shot at passage. SB 803, which would allow distilleries to keep the markup money from on-premise liquor sales, recently cleared the state Senate. The ball is now in the House of Delagates’ court to decide whether to take up the Senate legislation..."

Read the whole piece here.