2014 Issue 7: Sin Tax

2014 Issue 7: Sin Tax

I.          Summary

            Issue 7 is a renewal levy placed on the ballot by Cuyahoga County Council in order to continue a tax on cigarettes and products containing alcohol for another twenty years.  Funds raised are to be used exclusively for maintaining and improving the three sport stadiums—FirstEnergy Stadium, Progressive Field, and QuickenLoans Arena. 

            The Citizens League is not taking a position on the merit of this levy.  We have provided this information to educate the voters about their decision.

II.        Background

            A.        Cost Summary

            This is a proposed renewal of the existing tax of 4.5 cents per pack of cigarettes, 16 cents per gallon of beer (roughly 12 cans), 32 cents per gallon on wine (slightly more than 6 bottles) and mixed beverages, 24 cents per gallon of cider, and 3 dollars per gallon of hard liquor. 

            The tax is expected to raise $260 million over its twenty-year duration.

            The following link provides a calculator that voters can use to determine how much they will pay if the tax is renewed. 

http://www.cleveland.com/datacentral/index.ssf/2014/04/find_out_how_much_cuyahoga_cou.html

            B.        Use of Funds

            The tax will be used solely to maintain and improve the three facilities used primarily for professional sporting venues—FirstEnergy Stadium, Progressive Field, and QuickenLoans Arena. 

            FirstEnergy Stadium is owned by the City of Cleveland and leased to the Cleveland Browns.  The stadium is used for the Browns’ games and occasionally for concerts and local and regional amateur sporting events.

            Gateway Economic Development Corporation of Greater Cleveland owns both Progressive Field and QuickenLoans Arena.  It leases those locations to the Cleveland Indians and to the Cleveland Cavaliers. 

            In addition to hosting Indians’ home games, Progressive Field is used very infrequently for other events. QuickenLoans Arena hosts a significant number of entertainment events in addition to the home games of the Cavaliers and the Monsters hockey team.     

            The web site maintained by Gateway is located here:

            http://www.gatewaysportscomplex.org/

            D.        History

            Voters passed the tax in 1990 to run 15 years and to fund the purchase of the Gateway Project—what is now QuickenLoans Arena and Progressive Field.  In 2005, voters passed a 10-year renewal in order to pay off debt from the construction of what is now First Energy Stadium.

            The Greater Cleveland Partnership lobbied in the Statehouse for the inclusion of a renewal mechanism in the budget bill that passed in 2013. Without the amendment to the budget bill, the tax would have expired in 2015.

 http://www.cleveland.com/open/index.ssf/2013/07/cuyahoga_county_residents_coul.html

            E.        Understanding This Form of Taxation

            A “sin tax” is a form of consumption or sumptuary tax.  Consumption/sumptuary taxes are typically used for a variety of purposes.  A “sin tax” is often levied for the purposes of limiting certain socially undesirable activities.  A recent noteworthy example was the proposed tax in New York City on soft drinks, which are linked to obesity and additional health care expenses. 

            Because sin taxes are levied without regard to the income of the individual paying the tax, they are considered regressive. For example, a person of low income pays the same amount of tax for a bottle of wine as does a person of greater means.  It is also argued that the tax does not really diminish the socially undesirable consumption—in this case, smoking cigarettes and drinking alcoholic beverages.  It is also argued that the government can become reliant on the tax, and therefore lose the incentive to lessen the frequency of the activity in question.

            If the concern of the sin tax is truly the undesirable behavior, an optimal use of the tax would be to lessen that behavior. For example, a tax on cigarettes and alcohol would be used to fund cessation programs.  Here, they are used to fund construction and maintenance of entertainment facilities—locations where alcohol sales are a key revenue stream. 

            F.         Ballot Language

PROPOSED EXTENSION OFALCOHOL AND CIGARETTE TAXES FOR SPORTS FACILITIES COUNTY OF CUYAHOGA

A majority affirmative vote is necessary for passage.

For the purpose of paying the costs of constructing, renovating, improving, or repairing

sports facilities and reimbursing a county for costs incurred by the county in the construction

of sports facilities, shall excise taxes be levied by Cuyahoga County at the rate of three dollars

on each gallon of spirituous liquor sold in the county, sixteen cents per gallon on the sale of

beer at wholesale in the county, thirty-two cents per gallon on the sale of wine and mixed

beverages at wholesale in the county, twenty-four cents per gallon on the sale of cider

at wholesale in the county, and 2.25 mills per cigarette on the sale of cigarettes at wholesale

in the county, for 20 years beginning August 1, 2015.

 

PROPUESTA DE EXTENSIÓN DE LOS IMPUESTOS SOBRE EL ALCOHOL Y LOS CIGARRILLOS PARA FINANCIAR INSTALACIONES DEPORTIVAS

CONDADO DE CUYAHOGA

 

Se requiere un voto afirmativo por mayoría para su aprobación.

 

Con el fin de pagar los costos de construir, renovar, mejorar o reparar las instalaciones y

reembolsar al condado por los costos en los que haya incurrido el condado por la

construcción de instalaciones deportivas, ¿deberá recaudar el Condado de Cuyahoga

impuestos especiales a una tasa de tres dólares por cada galón de licores destilados

vendido en el condado, dieciséis centavos por galón vendido al por mayor de cerveza en el

condado, treinta dos centavos por gallon vendido al por mayor de vino y bebidas

combinadas en el condado, veinticuatro centavos por galón vendido al por mayor de

sidra en el condado, y 2.25 milésimos por cigarrillo vendido al por mayor en el condado,

por 20 años, comenzando el 1 de agosto de 2015?

 

III.       Additional Resources

The web site maintained by Keep Cleveland Strong, a group supporting the renewal.

http://www.keepclevelandstrong.org/?gclid=COio0_j5ir4CFUVgMgodTFcAnQ

Web site maintained by the Coalition Against the Sin Tax.

http://www.noclevelandsintax.com/

Web site maintained by the Coalition Against Unfair Taxes, an opponent.

http://nounfairtaxes.com/

In an April 24, 2014 guest column, R. Mark Giuliano, who is the senior pastor of the Old Stone Church and the former president of the Downtown Cleveland Residents Association, argues against the renewal.

http://www.cleveland.com/opinion/index.ssf/2014/04/love_the_sin_hate_the_tax_mark.html

An April 24, 2014 report from Andrew Tobias indicating that the three professional teams have paid $1 million to support the renewal effort.

http://www.cleveland.com/cuyahoga-county/index.ssf/2014/04/browns_cavs_indians_bankroll_pro-sin_tax_campaign_according_to_latest_campaign_finance_report.html

On April 15, 2014, Mark Naymik discussed the facility fee that attendees pay for some, but not all, events at the facilities.

http://www.cleveland.com/naymik/index.ssf/2014/04/sin-tax_debate_sheds_light_on.html

On April 7, 2014, Fox8 News sponsored a debate between a supporter, City Council President J. Kevin Kelly, and an opponent, William Tarter Jr. of the Coalition Against the Sin Tax.

http://fox8.com/2014/04/07/sin-tax-debate-unfolds-on-fox-8-news/

19 Action News televised several editorials for and against the renewal.

http://www.19actionnews.com/story/25146281/peter-pattakos-editorial?autostart=true

http://www.19actionnews.com/story/25081857/kevin-kellys-editorial?autostart=true

http://www.19actionnews.com/story/24582085/editorial-response-bill-grossman?autostart=true

http://www.19actionnews.com/story/24522012/editorial-sin-tax-take-3?autostart=true

Coverage of the anti-renewal group’s proposal for alternative funding through a facility fee.

http://www.cleveland.com/cuyahoga-county/index.ssf/2014/04/anti-sin_tax_group_pitches_facility_fee_as_a_means_to_pay_for_stadium_upkeep.html

Brent Larkin writes in favor of the renewal.

http://www.cleveland.com/opinion/index.ssf/2014/04/approving_sin_tax_would_cement.html

Cavaliers study released in support of the renewal.

http://www.cleveland.com/cuyahoga-county/index.ssf/2014/04/cleveland_cavs_make_case_for_sin_tax.html

Video of an April 1, 2014 discussion hosted by The City Club of Cleveland, Featuring Neil deMause, Editor, fieldofschemes.com; Kevin Kelley, President, Cleveland City Council; Len Komoroski, CEO, Cleveland Cavaliers; Peter Pattakos, Representative, Coalition Against the Sin Tax. Moderated by Nick Castele, Reporter/Producer, WCPN ideastream.

https://www.youtube.com/watch?v=2csb0rYXoNA&list=UUKf3bixa-gvh3Yb2rCd8wwQ

A March 28, 2014 summary of reader’s comments on the sin tax.

http://www.cleveland.com/cuyahoga-county/index.ssf/2014/03/what_do_clevelandcom_readers_think_about_the_sin_tax.html

Coverage of the March 18, 2014, kick-off of the anti-renewal group’s campaign.

http://www.cleveland.com/cuyahoga-county/index.ssf/2014/03/grassroots_campaign_against_sin_tax_gets_organized_at_campaign_launch_event.html

Coverage of a February 25, 2014, tour provided by the Cleveland Indians of maintenance issues at Progressive Field.

http://www.cleveland.com/cuyahoga-county/index.ssf/2014/02/cleveland_indians_offer_behind_the_scenes_tour_of_possible_sin_tax_fixes_at_progressive_field_video.html

Andrew Tobias covers the pro-renewal campaign’s kick-off event on February 18, 2014.

http://www.cleveland.com/cuyahoga-county/index.ssf/2014/02/sin_tax_renewal_backers_kick_off_campaign.html

A February 5, 2014, article from Roldo Bartimole that encourages renegotiation of leases.

http://www.cleveland.com/opinion/index.ssf/2014/02/the_alternative_to_the_sin_tax.html

On January 28, 2014, Andrew Tobias reports on County Council’s vote in favor of placing the measure on the ballot.

http://www.cleveland.com/cuyahoga-county/index.ssf/2014/01/cuyahoga_county_sin_tax_renewal_headed_to_may_ballot_would_pay_for_sports_stadiums.html

Video of the County Council meeting, which included extensive comments, wherein the Council approved the measure placing the renewal on the ballot.

https://www.youtube.com/watch?v=OkBPL1UTnmA

Video from a January 28, 2014, public hearing hosted by County Council, part 1.

https://www.youtube.com/watch?v=I6MYst-LiVs

Part 2 of the same hearing.

https://www.youtube.com/watch?v=FslrFOvm2QI

Coverage of the issue by Tom Beres of WKYC:

http://www.wkyc.com/story/news/politics/2014/01/13/cleveland-sin-tax-renewal-faces-uphill-fight/4461145/

http://www.wkyc.com/story/news/politics/elections/2014/04/29/perspective--sin-tax-vote-realists-vs-idealists/8477549/

http://www.wkyc.com/story/news/politics/elections/2014/04/25/between-the-lines--dissecting-the-sin-tax-pros-and-cons/7821137/

http://www.wkyc.com/story/news/politics/2014/03/26/cleveland--what-happens-if-sin-tax-fails/6925599/

Coverage of the issue by Tom Livingston of Newsnet5

http://www.newsnet5.com/news/news-archives/video-vault-wews-coverage-of-the-sin-tax-campaign-and-vote-in-1990

Carol Caruso of the Greater Cleveland Partnership, argues in favor.

http://www.cleveland.com/metro/index.ssf/2013/08/extending_sin_tax_is_vital_to.html

Coverage from July 3, 2013, of the legislation in Columbus that enabled this renewal levy.

http://www.cleveland.com/open/index.ssf/2013/07/cuyahoga_county_residents_coul.html