Lawmakers, others resist call to raise alcohol tax

January 03, 2010|By Larry Carson

With state revenues in a deep, dark hole, some groups are pushing for an increase in taxes on a product no one truly needs, many would be better off without and which hasn't had a state tax increase in decades - alcohol.

The Abell Foundation, created in 1986 with proceeds from the sale of the family-owned Baltimore Sun, is pushing for a 10-cent-per-drink tax increase on beer, wine and liquor, and The Sun has supported the idea in several editorials. But if the opinions of Howard County legislators are indicative, that push might be a long, uphill one, especially in an election year. Only one of the county's 11 legislators supports a no-strings-attached alcohol tax increase, while five, including all three Republicans, oppose the idea outright. And four lean toward being against it but are willing to listen, they said.

The foundation's study by David H. Jernigan and Hugh Waters, two Johns Hopkins University public health researchers, concluded the increase could raise $214 million in new revenue next fiscal year. In addition, they argue that higher prices for alcoholic beverages will help public health by reducing consumption. Maryland's tax on hard liquor was last raised in 1955, while beer and wine taxes increased last in 1972 - an unusually long length of time that many suspect is because of generous liquor industry campaign contributions to state legislators through the years.

Liquor store owners and restaurant interests oppose the idea, arguing that while Maryland's beverage prices might be lower than those in nearby Virginia, Pennsylvania and Delaware, that helps draw business to Maryland stores, preserving jobs. Besides, indirect taxes have hit the industry, argued John Gorzo, president of the Howard County Licensed Beverage Association and owner of Glenwood Wine and Spirits.

"We got hit last year with an increase in the state sales tax," Gorzo said, and small-business owners are also facing a big jump in unemployment taxes to help replenish the state's sagging fund.

"For our industry, I hope it doesn't happen," Gorzo said.

The move is also strongly opposed by the Maryland Restaurant Association, which has its headquarters in Columbia.

"Profits are already dwindling" for restaurants, said Melvin Thompson, the association's senior vice president. "Most restaurants are trying to hold the line on prices," he said.

But although Howard County's state legislators are painfully aware of a projected $2 billion state budget shortfall, only one seemed ready to openly advocate a tax increase on alcohol.

"I would support it," said Del. Elizabeth Bobo, a Democrat not shy with her opinions.

"I think it just makes a whole lot of sense. I think it's time to do it." Bobo isn't naive about political realities, however.

"We have a very strong liquor lobby," she said, but "to have that much fear of one segment of the economy is not good."

Several other Democrats said they could support a tax increase on alcohol but only under limited circumstances.

Delegation chairman Del. Guy Guzzone said he'd consider it only if the revenue were dedicated to helping thousands of developmentally disabled people who have been waiting years for state aid.

"I am completely committed to that community," he said. "If somehow that [revenue] could be directed to that community, I would consider it." Generally, however, "I'm not interested in raising any taxes."

Senate delegation chairman state Sen. James N. Robey has said numerous times that he would not favor tax increases, but he said he might consider the alcohol tax.

"I've said all along I would not raise taxes. This is one exception I might consider if a compelling enough case is made," he said. "We can't just keep cutting, cutting, cutting, cutting and cutting."

"First you've got to see a bill," said Del. Frank S. Turner, who serves on the tax-writing Ways and Means Committee. With slots not yet producing revenue and the state budget in peril, any income is important. "Cuts are going to be very deep," he said about Gov. Martin O'Malley's proposed fiscal 2011 budget, due out this month.

State Sen. Edward J. Kasemeyer, the Senate majority leader who also serves on the Budget and Tax Committee, said he's very hesitant to add any new burden on citizens now.

"It's just one more little thing to add on - another pressure" during a bad economic time. The alcohol tax will increase, Kasemeyer said, but not likely in 2010.

Democratic Dels. Steven J. DeBoy Sr. and James E. Malone Jr., who like Kasemeyer also represent southwestern Baltimore County, are against any alcohol tax increase, they said.

"Everybody's feeling the pain right now," DeBoy said. Malone said he opposed the sales tax increase in 2007 and feels the same way about alcohol taxes. "I'm against it. I'm against doing that right now," he said.

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