DISCUS

DISTILLED SPIRITS COUNCIL TESTIFIES DOUBLING LIQUOR TAX HURTS HOSPITALITY INDUSTRY -- Massive Alcohol Tax Increase Will Cost Jobs, Revenue

March 4, 2003 07:00 PM
Annapolis— In testimony before the Senate Budget and Taxation committee, the Distilled Spirits Council strongly opposed proposed legislation to increase Maryland’s excise taxes on spirits, beer and wine calling it “a tax which hurts the hospitality industry and loses jobs for Maryland.” The two bills, SB 384 and SB 529, call for increases in distilled spirits excise taxes of 130 percent and 100 percent, respectively. Under the legislation, Maryland’s current distilled spirits tax rate of $1.50/gallon would increase to $3.50/gallon or $3/gallon. Economic studies show that additional tax increases will cause consumers to simply spend less or purchase their products at a lower price across state lines. According to an analysis based on standard econometric tables, Maryland would lose $64 million in economic activity and 800 jobs as a result of decreased sales and the loss of Maryland’s cross-border spirits sales advantage to neighboring states. “These monumental increases have already been shown to make no sense,” said David Wojnar, The Council’s Eastern Region Vice President, State Government Relations. “Only a few months ago, the legislature determined that the increase in prices would result in lower sales, lost jobs and the elimination of Maryland’s competitive position compared to neighboring states.” With Maryland’s current excise tax rate, the state’s retailers sell an estimated 580,000 gallons of spirits per year to out-of-state residents. If either bill is enacted, the excise tax will eliminate the incentive for out-of-state shoppers to buy their products in Maryland. Moreover, Maryland commuters to D.C. will have greater incentive to shop in the District. Wojnar added, “We’re aware that Maryland has a significant budget challenge to address but at a time when the hospitality industry and state residents are hurting, it makes little sense to pile on these exorbitant taxes.” Wojnar pointed out that Maryland’s two million responsible spirits consumers already pay their fair share of taxes. When a typical bottle of spirits is purchased in Maryland, more than half of the purchase price goes to a tax of some kind, making distilled spirits one of the state’s highest taxed consumer products. CONTACT: Lisa Hawkins or Patrick MacElroy Telephone: 202-682-8840 SCROLLER Publication Name: Publication Author:
 

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