DISCUS

HIGHER ALCOHOL TAXES MEAN JOB LOSSES FOR MARYLAND'S HOSPITALITY INDUSTRY; Massive Alcohol Tax Increase Will Cost Jobs, Revenue

March 13, 2007 08:00 PM

ANNAPOLIS – Raising taxes on distilled spirits, beer and wine could cost Maryland 1,800 jobs, according to Distilled Spirits Council Vice President Jay Hibbard, who testified to the Maryland House Ways and Means Committee today in opposition to House Bill 757.  The bill would increase taxes on distilled spirits by 200 percent to $4.50 per gallon, raise taxes on beer to 27 cents per gallon and wine to $1.20 per gallon. 

“Responsible consumers of beverage alcohol already pay more than their fair share of taxes,” said Hibbard, who pointed out that nearly 50 percent of the average cost of a 750 ml bottle of spirits in Maryland goes towards taxes.  “With this tax increase, prices would go up another nine percent, penalizing both consumers and the hardworking men and women of Maryland’s hospitality industry.”

An economic analysis by the Distilled Spirits Council shows that additional tax increases will cause consumers to simply spend less or purchase their products at a lower price across state lines – resulting in job losses in Maryland’s hospitality industry and a loss of sales to bordering states. 

More than 27,000 Marylanders are employed by hotels, tourist sites, bars and restaurants.  “It makes little sense to spend tax dollars to promote tourism and then undercut that very effort with higher tax rates on beverage alcohol,” said Hibbard, noting that between lost resident purchases and reduced cross-border sales spirits volumes would decline by an estimated nine percent of total state volume – worth an estimated $40 million to retailers.

The Council also testified today in opposition to Senate Bill 422, identical legislation heard by the Senate Budget and Taxation Committee.

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