San Francisco Alcohol Mitigation Fee Michele Simon, JD, MPH Research and Policy Director Marin Institute

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1 San Francisco Alcohol Mitigation Fee Michele Simon, JD, MPH Research and Policy Director Marin Institute Small Business Commission Meeting July 12, 2010

2 Who is Marin Institute? National leader in alcohol policy since 1987 Mission to reduce alcohol harm in communities Monitor alcohol industry marketing and lobbying tactics Science-based approach to policy Beer * Pricing is the most influential factor in alcohol consumption

3 Cost of Alcohol Use in San Francisco Two-thirds of San Francisco adults are drinkers; this is higher than the national rate of 55% Alcohol is a significant cause of premature death of both men and women in San Francisco San Francisco government bears $17.7 million in unreimbursed alcohol-related costs This is an under-estimate due to conservative assumptions; also crime costs were excluded

4 Cost of Alcohol Use in San Francisco Department of Public Health Treatment and Prevention Cervices San Francisco General Hospital Services Sobering Center Fire Department Emergency Medical Services transportation

5 San Francisco Alcohol Mitigation Fee The ordinance: is designed to reimburse the city for alcohol harm costs imposes a $.076/oz of ethanol (roughly 5 cents per drink) on alcohol wholesalers and manufacturers selling direct to consumers Beer * says fee may only be used for unreimbursed alcoholrelated costs to City and program administrative costs

6 Myth: The fee is a hidden tax Reality: Under well established law in California, governments can impose a fee on business Must show: - reasonable relationship between the source of the fees and how the money will be used. - Sinclair Paint Co. v. State Board of Equalization, 1997

7 Myth: The alcohol fee penalizes everyone for irresponsible drinkers All drinking has a cost Should not blame victim for addiction Most alcohol problems are not caused by alcoholism or addiction per se Even moderate drinking causes chronic illnesses such as cancer Right now, everyone is paying for problems

8 Myth: The fee is going after small businesses Reality: The ordinance imposes the fee on alcohol wholesalers, not retailers, bars, restaurants, hotels, or anyone in the hospitality industry Caveat: Those selling directly to consumers such as brew pubs will have to pay the fee. Whether fee is passed on is up to wholesalers

9 Myth: The fee will result in massive job losses, and retailers and bars will go out of business Reality: There are no published studies demonstrating loss of business or jobs due to an alcohol tax or fee Nickel a drink unlikely to have much impact Research shows businesses adequately compensate for any volume loss with higher prices. In fact, many businesses make money when taxes/fees are increased.

10 Myth: Fee will cause consumers to purchase alcohol outside of San Francisco Reality: Residents: Cost of leaving the city (gas, bridge, BART) far exceeds additional 5 cents/drink Others: Tourists? Doubtful. Residents of East Bay, North Bay? Bridge tolls larger factor Other cities/counties may also impose similar fees once SF model is established

11 Myth: The fee opens the door to unchecked increases for new DPH programs DPH cannot just create new programs Fees must be related to alcohol harm and can only cover unreimbursed costs Fees collected may not exceed $17.7 million identified by the nexus study After 5 years, Controller s office is required to update the nexus study

12 San Francisco Alcohol Mitigation Fee This modest fee will help San Francisco recoup some of the enormous cost of harm caused by alcohol consumption Currently, all residents and businesses are paying the costs through taxes and loss of business from unchecked alcohol problems Don t listen to alcohol industry scare tactics Alcohol fee is reasonable and long overdue

13 Marin Institute s Ultimate Goal To put ourselves out of business, not you Questions? Michele Simon, JD, MPH Research and Policy Director Beer * Marin Institute (415) (direct) MicheleS@MarinInstitute.org

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