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Liquor tax proposal reduced; revenue same

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The City is such a nightlife mecca, with more bars and entertainment than similar-sized cities, that it can impose a fee on alcohol lower than initially proposed and still collect the same amount of money.

Supervisor John Avalos on Wednesday amended his alcohol mitigation fee legislation. His proposed fee on each ounce of ethanol sold was reduced by 25 percent from 7.6 cents to 5.7 cents.

If the fee is approved, according to a city controller’s report, consumers would pay an extra 3.75 cents per standard drink rather than the nearly 5 cents under the initial proposal.

The Board of Supervisors will continue a hearing on the legislation at 11 a.m. Monday.

Avalos is pushing the alcohol fee on wholesalers and manufacturers, such as brew pubs distributing and selling alcohol in San Francisco. He wants San Francisco to begin recovering most of the money it spends on alcohol-related services each year, including emergency calls and public health services.

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The fee will only recover an estimated $15 million of the roughly $18 million San Francisco spends on these services each year.
The fire department alone spends $4 million yearly responding to alcohol-related calls, money that could otherwise pay for 25 positions, said Fire Chief Joanne Hayes-White.

While the fee will put more money into city coffers, effectively preserving some city jobs and services, it will likely take a toll on bars, restaurants and private sector jobs, according to an economic analysis report issued by The City’s economist.

The fee will fall directly on wholesalers, who will most likely pass that cost along to the retailers — bars, restaurants and liquor stores, said Ted Egan, chief economist for San Francisco, who will likely pass the cost along to consumers, who may spend less, Egan said.

“There will be a reduction in employment associated with reduction of spending at bars and rest and liquor stores,” Egan said.

Business leaders are dubious, saying it sounds more like an illegal tax.

“You are not legally able to regulate wholesale liquor in the state of California or tax it,” said Jim Lazarus, vice president of public policy for the San Francisco Chamber of Commerce. “We believe this is an illegal fee and we would love to see the city attorney’s opinion on it.”


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