The enablers in Annapolis

Our view : Too long ignored, antiquated alcohol tax rates need a boost

March 19, 2009

Before Gov. Martin O'Malley and Maryland legislators cut another penny from classroom aid, before they balance the budget by reducing mental health services or Medicaid and before state employees are furloughed again, they must reform a decrepit alcohol tax structure that's become impossible to stomach.

How bad is it? Maryland has the lowest tax on distilled spirits in the nation at $1.50 per gallon. The taxes on beer, 9 cents per gallon (less than one penny per 12-ounce can), and wine, 40 cents per gallon, rank near the bottom of the list, too.

This has been a boon for those who make a living selling alcohol, but it's profoundly misguided public policy. This failure to keep up with inflation - the tax on spirits was set in 1955 - means everyone is, in essence, underwriting the sale of booze. It doesn't take a prohibitionist to see the harm in that.

Sales taxes, income taxes, property taxes, tobacco taxes, all have risen significantly over the years. The comparison to tobacco is particularly apt - cigarette smokers contribute nearly 20 times more to the state budget than those who prefer Johnnie Walker or Jim Beam.

Yet the health effects are nearly as bad. Alcoholism, drunken driving, domestic violence, all and more of society ills are linked to the excess consumption of alcohol, and they are surely worsened when the government chooses to help keep prices low. The national averages for alcohol excise taxes are two to three times higher at $3.62 per gallon for spirits, 74 cents for wine and 24 cents for beer.

Some lawmakers would like to raise the tax to make health insurance more affordable, others to pay for much-needed services for the developmentally disabled. The bottom line is the tax needs to be increased regardless of what it finances. For too long, lawmakers have caved to the interests of tavern owners and wholesalers, a powerful lobby that gives a lot of money to politicians.

The biggest obstacle may be the cowardice of lawmakers who fear voters won't tolerate another tax increase after the budget-balancing efforts of 2007. But if elected officials fail to take action, they'll have to explain why they preferred to raise the sales tax, cut education funding or made myriad other difficult choices to slay the deficit while leaving alcohol taxes in the Eisenhower years.

A wholesale tax increase amounts to pennies on the drink. Martini olives cost more.

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