Raise Michigan's beer tax

The Detroit News is highlighting ideas from various groups to promote discussion on reform, restructuring government and the economy.

Raise Michigan's beer tax

Idea 4: Increase the state beer tax, which is 1.9 cents per 12-ounce can or bottle, by a nickel, dime or quarter a bottle.

Why: Michigan's revenues are declining, and this tax hasn't been increased since 1966 (when it was actually cut). Because the state has long ignored the beer tax as a potential revenue source, beer accounts for an ever-shrinking portion of state tax revenues -- and other revenue sources make up the difference. In 1966, Michigan collected $15.50 in sales tax for every dollar in beer tax. In 2007, Michigan collected $129 in sales tax for every dollar in beer tax. The projected general fund and school aid deficits total about $2.7 billion. Besides numerous tax-saving reforms, the state needs an honest, blunt and creative re-examination of the sources of state tax revenue.

Benefit: If Michigan had simply adjusted the 1966 beer tax to inflation over the years, it would result in an additional $250 million a year in tax revenue. Consumers wouldn't really notice the tax increase much.

How: Change state law, Public Act 58 of 1998.

Obstacles: The Michigan Beer & Wine Wholesalers Association, one of the most powerful and well-funded lobbying groups in the state. It argues a higher tax will dry up consumption. Yet, national statistics show very little correlation between beer tax rates and consumption. Twenty-one states have higher beer taxes than Michigan. Nineteen of those states have higher beer consumption than Michigan. Gov. Jennifer Granholm considered raising the tax but didn't include it in her recent plan, saying she didn't want to raise the cost of a beverage drunk by "average Joes."

Source: The Center for Michigan