Higher alcohol taxes questionable

By Joe Kafka, Associated Press Writer | Sunday, December 18, 2005

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PIERRE — A campaign to collect 16,728 signatures to allow South Dakota voters to decide whether a retail tax should be added to alcoholic beverages is struggling, a Pennington County official says.

Delores Coffing, a county commissioner from Rapid City involved in the campaign, said people like the idea of a 1 percent tax on beer, wine and liquor sold for home consumption or in bars. But finding volunteers to circulate petitions is a chore, she said.

“Everybody that I’ve talked with supports the idea of an alcohol tax to offset the cost that alcohol imposes on everybody via their taxes. People want relief from supporting the problems that alcohol abuse causes — law enforcement, treatment, welfare, prosecutions, the public defender, the whole thing.

“However, I’m having an awful time getting anyone to carry petitions. They will sign the petitions, but they’re just too busy to carry one,” Coffing said. “Maybe people will be less busy after the holidays.”

If enough signatures are submitted to the secretary of state by May 2, the proposed retail tax on alcohol will be decided in the 2006 general election.

Pennington County administrative assistant Ron Buskerud, author of the proposal, estimates that it would raise as much as $13 million a year in additional revenues from alcohol sales. The money would be distributed to counties on the basis of their populations and total assessed property values, he said.

Existing alcohol taxes, which are levied on wholesalers, raise about $10 million a year, with 75 percent going to the state and 25 percent to cities. Counties get none of those revenues.

County officials have sought an increase in alcohol taxes for years, arguing that they need the money to help pay for alcohol-related costs of law enforcement, jails, prosecutions, treatment programs and other services.

But each year, legislators have rejected proposals to buoy county finances by increasing alcohol taxes. The alcohol industry has adamantly opposed those measures.

Taxes on alcoholic beverages are high enough in South Dakota, and raising them would lead many to cross state borders for cheaper liquor, said Caren Assman, executive director of the South Dakota Retail Liquor Dealers Association.

“I do believe that’s true,” she said.

Assman said that state and local taxes on a one-fifth gallon jug of liquor account for 15 percent of its retail cost in South Dakota and that federal taxes add another 19 percent.

South Dakota taxes a gallon of liquor at $3.93.

Assman said that there is no state tax on liquor in Iowa that and the per-gallon tax is $3 in Nebraska, $2.50 in North Dakota, 95 cents in Wyoming and $5.03 in Minnesota.

Coffing scoffs at claims that the proposed 1 percent tax would send drinkers to other states for spirits.

“People don’t care about that one cent. People who are having a drink or two don’t care about such a little dab. They don’t go shopping around for where they can get the cheapest Scotch and soda or whatever it is they drink,” she said.

“The industry pretends like the tax is going to kill it,” Coffing said. “It surprises me because the liquor industry isn’t paying the tax anyway. It’s the people buying the drinks.”

The petition drive may be the last hope in the near future of increasing taxes on alcohol in South Dakota because legislators won’t likely raise those taxes in 2006, an election year, Buskerud said.

The County Commissioners Association has supported bills in recent years to add more taxes onto alcoholic beverages, but the group isn’t willing to continue the fight in the 2006 Legislature, he said. The association has even shied away from taking a stand on the petition drive started by Pennington County officials, Buskerud said.

That lack of support has caused county officials to consider leaving the statewide organization, he said. Pennington County’s dues are about $10,000 a year, and it may not renew its membership unless the association can show what it does for the county, Buskerud said.

“The county commission feels like they were let down by them, and we’re not happy about it,” he said.

Coffing says the commission will decide next month if it will continue in the association.

An association official did not return calls from a reporter.