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Raise a Glass, Raise Tax Revenue

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Supporters of a "Charge for Harm" ordinance, proposed by Supervisor John Avalos, want to tack on a few extra cents per serving of alcohol in San Francisco in order to mitigate $18.1 million a year in alcohol-related costs to the city.

The city's Budget and Finance Committee predicts the ordinance would generate $16 million annually for alcohol treatment programs and emergency transportation. Among other benefits, a portion of the money could fund the equivalent of 25 fulltime fire department positions that otherwise might be cut.

The expectation is that if consumers have to fork over another nickel or so, they'll be less likely to buy booze--or at least their consumption would pay for the damage done by impaired individuals. But can an extra 5 to 10 cents per beer really deter people from drinking?

"Of course not," says Michael Scippa, director of public affairs for the Marin Institute, an alcohol industry watch dog, which supports the new tax. "Now, it's just ludicrous to think that."

Opponents argue that the fee would harm small businesses that can't absorb it. Supervisor Sean Elsbernd said the fee could lead to a $60,000 loss in sales tax revenue.

Scippa said that according to the comptroller's office, such a tax could lead to $2 million in losses for bars and restaurants and $4 million for liquor and grocery stores. But he said he doesn't think businesses will be negatively impacted because they recoup the tax from consumers.

The Marin Institute advocates policies that address the impacts of alcohol abuse. According to their data, San Francisco needs such a booze tax more than most cities because residents consume 25 percent more alcohol per capita on average than the rest of Californians.

The ordinance initially included an average increase of 7 cents per serving of alcohol, which the committee voted yesterday to reduce to 5 cents a serving. The fee would first fall on wholesale alcohol distributers and from there trickle down to retailers, who would ultimately pluck the fee out of consumers' wallets.

"Historically, what happens whenever there's a price increase," Scippa says, "[businesses] pass that cost on, tack a little bit on for themselves," he said. "Everybody makes more profit on it."

The committee will discuss the ordinance Monday, and it is expected to voted on it September 7. If the ordinance passes, it takes effect January 1, 2011.

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