The wages of sin taxes.

• Author: Mooneyham, Scott
• Position: CAPITALGOODS

Smoke hovered in the hallways in 1999 when farmers from across the state came to Raleigh to have their say on how legislators should use money from the multibillion-dollar national tobacco settlement. Back then, the Legislative Building was still a haven for smokers. Even on the House and Senate floors, lawmakers could light up, and growers scattered through the building did, too. After all, North Carolina was a haven for the industry, producing about a third of the tobacco grown in this country and providing a home for some of the largest cigarette factories in the world.

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Now there's no smoking in the Legislative Building. In fact, a bill passed this year will make people taking smoke breaks stand at least 25 feet from entrances of state buildings. Smoking in state cars? That has been banned, too. Three years ago, the honorables decided that having the nation's lowest excise tax on cigarettes--a nickel a pack--wasn't the way to go. They raised it to 35 cents.

You might attribute shifting gears on Tobacco Road to officials getting up to speed with the rest of the nation. But the explanation lies more with economics than ethics. Big Tobacco just isn't that big anymore. As Tar Heel agriculture became less dependent on growing it, R.J. Reynolds slashed jobs and Phillip Morris packed up to head back to Richmond, Va., the golden leaf lost some political luster. It's a lesson beer makers and distributors should be reflecting on about now. The beer industry never has had the muscle tobacco once did, but the Miller plant in Eden employs 600. And since the end of Prohibition, local distributors have been significant employers and influential figures in their hometowns.

While lawmakers finally got the gumption to raise taxes on cigarettes, the brewers, distributors and their lobbyists have been able to stave off any hike in the excise tax on beer. In fact, the state rate of 53 cents a gallon hasn't changed since 1969. But now change in the industry is all the buzz. Forget the rise of craft brewers, it's mergers and acquisitions among the big boys that could shake things up in North Carolina and across the country. Belgium-based InBev's $52 billion deal to buy St. Louis-based Anheuser-Busch still has regulatory hurdles to clear, but that deal and last year's agreement by the makers of Miller and Coors--the former now owned by South African Breweries and the latter by Canada's Molson--to combine U.S. operations mark unprecedented...