Lawmakers, liquor lobby square off

March 19, 2009|By JEAN MARBELLA

I was miles and miles away, in a vineyard in Napa Valley, when I first learned just how powerful the liquor lobby is back home in Maryland.

A friend and I were driving the wine country's rolling roads, stopping here and there to sample the fruits of the various vintners' labors.

The usual sniffing and sipping were quickly followed by the selling: You won't find us at your neighborhood liquor store, but we have a Web site, we can ship directly to you, where are you from?

I soon learned to say another state, since Maryland was well-known to the small winemakers there as one of the 15 or so states that ban direct-to-consumer sales.

After listening to a few rants about protectionism and free trade, it was easier to lie and avoid getting a whine along with the wine.

Preventing online wine sales is just one of the serial victories that the booze industry tends to win in Annapolis. A major contributor to state politicians, the industry and its lobbyists tend to come out in full force when legislators consider any changes to the age-old way of liquor distributorship.

Which also explains why, even after multiple unsuccessful attempts, even as any number of other taxes have risen over the years, state excise taxes on beer and wine haven't gone up since 1972 and on distilled spirits even longer - the prehistoric, or at least, the pre-me, 1955.

But this week, the General Assembly takes on the issue once again.

"I hope this is going to be the year," said Del. William A. Bronrott, a Montgomery County Democrat who has introduced a bill to raise excise taxes on alcohol to fund services for the developmentally disabled and for addiction treatment and prevention programs.

The bill would increase the tax from $1.50 to $6 per gallon of liquor, from 40 cents to $1.60 per gallon of wine and from 9 cents to 36 cents per gallon of beer. Legislative analysts estimate that the increases would produce an extra $82.6 million in revenue for the state.

The bill will be heard by the House Ways and Means committee today; yesterday, the companion Senate bill went before the Budget and Taxation Committee.

There, the usual suspects showed up, some of the same industry reps who last year successfully killed direct online wine purchases (never made it out of committee) and greater regulation and taxation of alcopops, those fruity concoctions like Mike's Hard Lemonade that public health advocates decry as starter cocktails for the underage set (General Assembly votes to keep the status quo; Gov. Martin O'Malley refuses to veto it).

Representatives of various brewers, spirits companies, wholesalers, distributors and restaurants lined up as they always do to protect the interests of Maryland's three-tiered system through which booze must travel as it makes its way to your glass.

They had to step a bit gingerly this time, testifying as they did after people suffering from developmental disabilities, or their representatives, who told woeful tales of long waiting lists of 18,000 or more for services. One woman spoke of going without sleep to take care of her daughter; another spoke of working weeks on end without a day off because of short staffing at a residential program for the disabled.

"In a perfect world, they would have all their needs met," Marta Harding, a lobbyist for Diageo, a spirits company, said. "The question is if this bill is the right way to do it."

The answer, she and the other reps said, is no. They argued that their taxes indeed have gone up - along with everyone else's - when the sales tax went up to 6 percent last year. They said that now, during an economic downturn, was the wrong time to burden the industry and consumers with higher taxes.

"It's a tough time now for our industry," said Melvin Thompson, who represents the Restaurant Association of Maryland.

A legislative analysis estimates that the proposed tax increase would indeed have an impact on sales: from a 9 percent decrease in the sale of hard liquor to less than a 1 percent decrease in beer sales.

Even the bill's sponsor, Sen. Richard Madeleno, said after the hearing that legislators face a Solomon-like choice: needing to raise money for the disabled and addiction services but heeding the threat of potential job losses in the liquor and hospitality industry.

"There has to be a balance," he said. "No one likes tax increases, but the need has gotten so great."

In a state that has a reputation for high taxes, it's a testament to the power of the liquor lobby that Maryland, along with Washington, D.C., has managed keep its excise tax on spirits the lowest in the country. It also is close to the bottom when it comes to taxes on beer and wine.

Supporters of the bill wore stickers proclaiming, "five cents makes sense," which is what they say the increased tax would amount to per drink. "You've heard of the March of Dimes?" Bronrott said. "I'm calling this the March of Nickels."

At a time when Maryland is hurting for revenue, this seems like one tax increase that should go down a little easier than others.

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