Pubdate: Thu, 06 Mar 2014
Source: Washington Post (DC)
Copyright: 2014 The Washington Post Company
Contact: http://mapinc.org/url/mUgeOPdZ
Website: http://www.washingtonpost.com/
Details: http://www.mapinc.org/media/491

THE WAGES OF WEED

Revenue From Legalized Pot May Not Meet Expectations.

MARIJUANA LEGALIZATION was a hot topic at the recent meeting of the 
National Governors Association in Washington, for obvious reasons - 
among them the prospect of raising much-needed revenue by taxing pot 
sales. "With all the bad weather we've had back home and all the 
potholes, we ought to have the revenue go to infrastructure - 'pot 
for potholes,' " Rhode Island Gov. Lincoln Chafee (I) said.

Such an experiment is underway in Washington and Colorado, so it's 
noteworthy that John Hickenlooper, the latter state's Democratic 
governor, did not echo Mr. Chafee's enthusiasm about the tax bonanza. 
"Going out and getting tax revenue is absolutely the wrong reason to 
even think about legalizing recreational marijuana," he said, since 
it puts a state in the position of benefiting from use of a harmful 
substance - even if it's not the most harmful.

Of course, government is already in that position, due to the levying 
of "sin taxes" on tobacco and alcohol. Mr. Hickenlooper could have 
bolstered his moral argument with a more practical political one: 
Over time, the tax take from legal pot probably won't live up to the 
hype because producers, distributors and consumers could develop into 
a powerful lobby opposed to taxation.

That's the lesson of post-Prohibition federal excise taxes on 
alcoholic beverages, which have gone up just once for beer and wine 
and twice for distilled spirits over the past 60 years. As a result, 
excise tax rates on alcohol are "far lower than historical levels 
when adjusted for inflation," as the nonpartisan Congressional Budget 
Office puts it in a recent report. The erosion of alcohol taxes is a 
tribute to the alcoholic beverage industry's clout on Capitol Hill. 
And U.S. breweries are pushing a bill that would erode them further, 
by halving the $18-per-barrel excise tax that large brewers pay and 
lessening the more modest tax on microbreweries. The proposal has 91 
co-sponsors in the House, according to a recent National Journal 
account. The beer lobby says it's all about helping the industry create jobs.

The bill's prospects for passage are dim in the short run, which is 
good, since what the country needs is a higher alcohol excise tax to 
help restore its lost value, trim the deficit and account more fully 
for the public health and safety costs of alcohol abuse. Also, the 
tax should be applied more uniformly across all beverages, as opposed 
to varying rates for liquor, beer and wine. The CBO says that taxing 
them all at $16 per proof gallon, a standard measure of alcohol 
content, would raise $64 billion over 10 years.

Our position is that marijuana should be decriminalized, but states 
in our area should go slow on any broader legalization until the 
results of the Washington and Colorado experiments are in. Obviously, 
some tax revenue from pot sales is better than none, which is what we 
get now. However, the likelihood of a smaller-than-advertised tax 
windfall is one of the many unintended consequences of legalization 
that lawmakers must weigh before they act.
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MAP posted-by: Jay Bergstrom