On Jan. 12, State Rep. Forrest Bennett (D), tweeted “I’m introducing a bill that would dedicate a small portion of revenue from alcohol sales to healthcare services for the un- & under-insured.”
Because the 2017 legislative session hasn’t started yet, the bill is far from being introduced to the floor. However, Bennett is confident in the bill and said, “I believe in providing an adequate safety net for the most vulnerable in our state, and I think that revenue brought in through alcohol sales is a good way to fund it.”
As of now there is an additional sales tax, known as an excise tax, on low-point beer (0.5 to 3.2 percent) in accordance with Title 37-163.3. The cost of that tax is determined by a flat rate of $11.25 for every barrel, calculated proportionally for the volume sold.
There is also a gross receipt tax, which is a tax on the gross revenue of the sold product levied on the seller, of 13.5 percent on the total gross receipts of anyone who holds a mixed beverage license.
The wording of Title 37-576 specifies that the state takes the gross receipts for “the sale, preparation or service of mixed beverages; the total retail value of complimentary or discounted mixed beverages; [any] ice or nonalcoholic beverages that are sold, prepared or served for the purpose of being mixed with alcoholic beverages and consumed on the premises where the sale, preparation or service occurs; and any charges for the privilege of admission to a mixed beverage establishment which entitle a person to complimentary mixed beverages or discounted prices for mixed beverages.”
The definition of mixed beverages for the purpose of this legislation is “one or more servings of a beverage composed in whole or in part of an alcoholic beverage in a sealed or unsealed container of any legal size for consumption on the premises where served or sold by the holder of a mixed beverage, beer and wine, caterer, public event, charitable event or special event license.”
The gross receipts tax is collected in addition to the excise tax, the general sales tax of the state of Oklahoma and any municipal or county sales taxes that may apply.
And, as of now, according to Title 37-576.1, “All revenues generated from the gross receipts tax levied pursuant to [everything mentioned above] shall be paid to the State Treasurer and placed to the credit of the General Revenue Fund of the State of Oklahoma.” This is the part of the legislation Bennett hopes to change with his bill.
According to Bennett, his bill would take five percent of the revenue from the mixed beverages tax and divert it “from the general revenue fund and into a protected fund that would hopefully bring some financial relief to hospitals and community health centers.”
Bennett notes that “community health centers offer services to everyone, and some offer it on a sliding scale based on income as well as free services for those living below the poverty level. It costs them the same to administer health screenings and other procedures no matter how much their patients can pay.
”Bennett shared that “there are 90+ community health centers in Oklahoma that are funded partially with private money, partially with federal grants and partially with state funds.” The revenue generated by this bill would replace state funds that were taken away due to budget constraints.
It’s a worthy cause, but the question remains, will it be effective? Will it be enough? According to the annual report of the Oklahoma Tax Commission for the fiscal year ended June 30, 2016, Oklahoma collected over $117.6 million on all beverage taxes and licenses. Of that total, about $53 million came from the mixed beverages gross receipts tax. If this bill had been in place this year only $2.6 million would have gone to community health.
Luckily, other recent legislation like SB 383 and SQ 792 are projected to significantly increase alcohol sales in the state by making alcohol more readily available to more people more often. The OTC’s fiscal impact statement for SB 383 projects that by fiscal year 2020 there will be a $2,553,000 estimated increase in beer excise taxes along with an $43,776,000 increase in mixed beverage gross receipts tax.
“Unfortunately, due to the number of people living in poverty in our state and the health problems associated with poverty, this fund isn’t going to solve all of our problems. But it would offer us an opportunity to raise protected funds, and help to chip in where we can so that health centers can continue to offer services to those in need,” Bennett said.
For now Oklahoma’s primary concern is fixing its immediate budget crisis, and so this bill will be effective in mitigating the impact on Oklahoma’s poorest citizens. This bill is going to be a necessary appendage to keep community health centers functioning, but it also sheds light on other concerns.
One concern is that if the legislator passes this bill, they won’t take any further steps toward improving healthcare in the state until the budget issues are fixed. Another concern is that the amount of revenue collected may not be enough to cancel out the long term health concerns of increased alcohol consumption among the general public. However, as of now, this bill receives my Liberal Seal of Approval™.