Raise Per Glass

A bill to impose a 25-cent tax on alcoholic drinks has cleared its first legislative hearing of the session, yet looming over it is the 2017 defeat of a similar bill by the alcohol industry.

The Legislature’s mood appears different in 2023. Greater awareness of alcohol’s harms seems to have permeated the legislative body. Partly because the stats are so stark. Statewide alcohol-related deaths rose more than 32% between 2019 and 2021—a punctuation mark on a already-existing reality borne out by data: New Mexicans die of alcohol-related causes at nearly three times the national average and alcohol is involved in more deaths than fentanyl, heroin, and methamphetamines combined.

Lawmakers face a suite of bills that would address the state’s alcohol crisis as well as a draft state budget that contains $5 million for a new Office of Alcohol Prevention, which would represent a significant increase in resources and personnel focused on the issue.Lawmakers face a suite of bills that would address the state’s alcohol crisis as well as a draft state budget that contains $5 million for a new Office of Alcohol Prevention, which would represent a significant increase in resources and personnel focused on the issue.

Some proposals aren’t generating significant opposition, including budgetary changes to ensure all alcohol excise tax dollars go toward programs to help New Mexicans rather than half going to pay for general operating expenses.

But a bill sponsored by Rep. Joanne Ferrary, D-Las Cruces, and Sen. Antoinette Sedillo Lopez, D-Albuquerque, stands out from the rest for what it proposes—a tax increase on alcohol—and the likelihood of robust opposition.

The lawmakers want to impose a flat 25-cent tax on alcoholic drinks statewide, meaning effectively an 18-to 21-cent increase on most alcoholic drinks served. Currently, alcohol is taxed at much lower rates per drink, depending on the type.

In New Mexico, as with many states, alcohol is taxed by the volume sold rather than as a percentage of its price. And the tax per volume hasn’t been increased for 30 years.

“I’m kind of frustrated with the questions and doubts because it’s way overdue,” Sedillo Lopez said.

In 2017, New Mexico legislators tabled a similar bill at its first hearing and the proposal was never heard from again due to opposition from the alcohol industry so vigorous at least one lawmaker called overly aggressive.

Will lawmakers see a repeat of history? On Feb. 10, the House Health and Human Services Committee gave House Bill 230 a “do pass” recommendation, and that might hint at what is to come.

Ferrary and Sedillo Lopez are hopeful, yet the latter admits, “I’ve been told it’s a heavy lift,” legislative lingo for a bill whose path to success could be extremely rocky.

Advocates lean on research to push for the tax hike. Study after study has shown that higher alcohol prices curb cirrhosis deaths, drunk driving, violence and crime, and even sexually transmitted disease. One of the most effective ways to raise alcohol prices is to increase taxes. Under their proposal, for instance, people buying a six pack of 12-ounce beers would pay about $1.20 more in taxes, and a pint of vodka would cost about $2.90 more, with some exceptions.

When Alaska raised its alcohol taxes by a few cents a drink in 1983 and again in 2002, a study found it cut alcohol-related mortality by 40%. In 2009 when Illinois raised taxes on a drink of liquor by less than a nickel, with smaller hikes for beer and wine, it cut fatal alcohol-related crashes by 26%, with an even larger reduction among drivers under 30. And in 2011 in Maryland, where advocates raised the sales tax levied on alcohol, the change reduced alcohol sales, accelerated a decline in binge drinking and cut alcohol-involved crashes and unsafe sex.

Not everyone agrees with this analysis, however.

Dan Weaks, a lobbyist for the New Mexico Wine and Grape Growers Association and the California-based Wine Institute, said higher taxes don’t always lead to lower consumption.

“Any time you raise the price point, it affects different people” differently, he said, adding that other studies call into question whether increasing taxes on alcohol definitively leads to reduced consumption.

Often pricier drinks lead people to buy lower-costing brands, Weaks said, adding: “That’s particularly true with young people.”

He contends that the 25-cent-across-the-board tax on drinks will affect smaller businesses more than larger producers because under the current excise tax they pay less than larger producers.

Likely to surface in the session, too, is New Mexico’s sunny economic picture. Booming oil and gas production and the revenues it generates mean New Mexico is sitting on $3 billion in excess of current expenses. Some lawmakers are likely to wonder if generating extra dollars by raising a tax on alcohol is necessary, even if advocates argue that generating extra dollars for New Mexico is not the point: It’s about changing the behavior of certain New Mexicans, particularly heavy and youthful drinkers.

House Speaker Javier Martinez, D-Albuquerque, said he didn’t want people to think a tax on alcohol would be a “silver bullet” to solve the state’s high alcohol mortality rate.

Sen. Majority Leader Peter Wirth, D-Santa Fe, said, “It’s never easy to do tax increases,” even when the state is looking for money during lean budget years.

Wirth predicts a friendlier reception for an alcohol bill sponsored by Sen. Gerald Ortiz y Pino, D-Albuquerque. That legislation, Senate Bill 220, would earmark all the revenue generated by the state’s alcohol excise tax to pay for drug and alcohol treatment rather than sending half of it into the state’s general fund.

“That has got to be fixed” first before the tax increase discussion, Wirth said, indicating he thought lawmakers in charge of crafting the state budget seemed open to the idea. Ortiz y Pino said he didn’t include a proposed tax increase in his legislation because he didn’t want to jeopardize it.

Indeed, Weaks, the lobbyist for the wine industry, said his clients support Ortiz y Pino’s bill, which hasn’t had its first hearing yet.

Nor has there been a hearing on a competing alcohol bill from Sen. Bill Tallman, D-Albuquerque. Senate Bill 61 would shift the revenues from the general fund to a new domestic violence victims fund, and rather than raise taxes, would allow all counties to impose a local alcohol tax, which is only currently allowed in McKinley County.

As for HB230, it heads next to the House Taxation and Revenue committee. “Hopefully they’ll be open,” Ferrary said.

This story was originally published at New Mexico In Depth, a SFR partner.