Increased excise taxes on tailgating necessities drives costs up for Saints and LSU fans
When you head to the store to load up on supplies for tailgating this weekend, you will probably find some of your party necessities cost more than last year.
Yes, inflation has increased 2 percent since 2015, but more drastic are the state excise tax increases that took effect on April 1st of this year. The Tax Foundation has defined excise taxes as:
“[S]pecial taxes on specific goods or activities…rather than general tax bases such as income or consumption…often included in the final price of products and services, and are often hidden to consumers.”
The bad news for Louisiana football fans is that “specific goods” includes alcohol and tobacco products, both of which are now taxed higher than they were last football season.
Louisiana’s beer tax was $0.32 per gallon on January 1, 2016, according to the Tax Foundation. This rate ranked the 19th highest in the nation. (The report notes “[r]ates are those applicable to off-premise sales of 4.7% alcohol by volume beer in 12 ounce containers.”)
But then in March, HB 27 was approved by the legislature and signed into law. This bill – now Act 13 – increased the state tax on malt beverages from $10.00 to $12.50 “per barrel containing not more than thirty-one standard gallons and at a like rate for 22 fractional parts of a barrel.”
Now, Louisiana’s rate is $0.40 per gallon, according the Distilled Spirits Council of the United States (DISCUS), which ranks 16th highest in the country.
Louisiana’s wine tax was $0.11 per gallon on January 1, 2016, according to the Tax Foundation. This rate ranked 5th lowest in the country. (The report notes “[r]ates are those applicable to off-premise sales of 11% alcohol by volume non-carbonated wine in 750ml containers.”)
In addition to hiking up the beer tax, Act 13 also targeted wine. Still wine “of an alcoholic content of not more than fourteen percent by volume” went from $0.03 to $0.20 per liter. According to DISCUS, Louisiana’s wine tax is now 28th highest in the nation, amounting to $0.76 per gallon.
Additionally, Act 13 raised rates on wines of higher alcoholic contents, including that “of an alcoholic content of more than fourteen percent by volume but not more than twenty-four percent by volume,” which went up from $0.06 to $0.35 per liter and that “of an alcoholic content of more than twenty-four percent by volume,” which increased from $0.42 to $0.55 per liter.
Even the sparkling wine received a tax hit from Act 13, undergoing a rate increase of $0.42 per liter to $0.55 per liter.
Louisiana’s tax on distilled spirits was $2.50 per gallon as of January 1, 2016, according to the Tax Foundation. This rate ranked 7th lowest in the nation. (The report notes “[r]ates are those applicable to off-premise sales of 40% alcohol by volume (a.b.v.) distilled spirits in 750ml containers.)
Act 13 did not stop at beer and wine, it hit the hard stuff too. Act 13 increased Louisiana’s liquor tax from $0.66 per liter to $0.80 cents per liter. DISCUS reports that this new rate, which amounts to $3.03 per gallon, is 28th highest in the nation.
Louisiana’s cigarette tax was $0.86 per 20-pack as of January 1, 2016, according to Tax Foundation, which ranked 35th highest in the nation. Then in March, not even 12 months after a cigarette tax increase in 2015, the legislature approved HB 14, which was signed into law as Act 4.
This Act added an additional $0.22 cent tax per 20-pack. Now, Louisiana’s cigarette tax rate is $1.08 per 20-pack. And do not think you can avoid the tobacco tax by switching to an e-cig. While most states do not tax e-cig and vapor products, Louisiana is among the four that do.
That’s right – even though these products have been found to have much fewer harmful chemicals than traditional cigarettes and have been described as an alternative that is safer for public health, in 2015, Louisiana implemented a tax of $0.05 per milliliter.
These tax increases were implemented as an attempt to help address the state’s struggle with recurring deficits. However, tax hikes of any kind – especially taxes that target specific industries and consumers – are not an ideal solution.
As the Tax Foundation points out, such excise taxes “are disproportionately borne by low-income taxpayers, making them one of the most regressive components of the U.S. tax system.”
It is unfortunate, then, that a 2016 report from the Tax Foundation ranked Louisiana’s government the 23rd largest excise tax collector per person, at $535 per head in one fiscal year. To compare:
- Alabama ranked 20th largest in the nation at $547 per person
- Arkansas ranked 30th at $466 per person
- Florida ranked 15th at $615 per person
- Mississippi ranked 25th at $498 per person
- Tennessee ranked 31st at $458 per person
- Texas ranked 18th at $568 per person
Prior to the enactment of Acts 4 and 13, Louisiana’s excise collection per person was already higher than most of the country and higher than many neighboring states. Rather than continuing down this road, or raising taxes of any kind, lawmakers should consider closing budget deficits with spending reductions.
Indeed, demographer Elliott Stonecipher has demonstrated that total state spending increased 80 percent from 1986 to 2015 – which was over and above a 113 percent inflation adjustment – while population increased only 5.51 percent.
Further, of 2004-2015, Stonecipher highlights:
“Louisiana revenue has risen 3-times the rate of population growth, and spending has jumped 5-times that rate… in 2015, we spent what we did in 2004, plus the 26% inflation rate ($4.6 billion) plus $3.3 billion. Would someone please tell us where it went?”
Clearly, Louisiana’s financial problems require more than quick fixes. A comprehensive budget overhaul that boosts the economy and helps all Louisianans is long overdue.
Margaret Mire is an Adjunct Scholar at the Pelican Institute for Public Policy