DISCUS

NEW ALCOHOL TAX PROPOSAL THREATENS PENNSYLVANIA'S HOSPITALITY INDUSTRY -- Six percent sales tax will cost state 2,000 jobs

July 1, 2003 08:00 PM
NEW ALCOHOL TAX PROPOSAL THREATENS PENNSYLVANIA’S HOSPITALITY INDUSTRY -- Six percent sales tax will cost state 2,000 jobs-- Washington, DC – A proposal to add a six percent sales tax on alcohol consumed at Pennsylvania bars, restaurants and taverns will result in over 2,000 job losses in the state’s hospitality sector, according to an economic analysis by the Chief Economist of the Distilled Spirits Council. Currently, Pennsylvania’s on-premise outlets must pay a six percent wholesale sales tax on their beer, wine and spirits purchases. The new proposal being considered to fund new state programs would maintain the existing tax on the businesses and create an additional retail tax for Pennsylvania’s consumers. “Pennsylvania is making great progress generating millions of dollars in much-needed revenue through the success of Sunday liquor and wine sales,” said David Ozgo, Chief Economist for the Distilled Spirits Council, who based his analysis on government models. “It makes little sense for state government to now consider action that would depress sales and eliminate jobs.” Distilled spirits products are already one of Pennsylvania’s most highly-taxed consumer goods, with over half of the price of a bottle of spirits going to taxes. Ozgo stated that further raising Pennsylvania’s already excessive tax, will result in reduction in overall sales volumes. “It’s simple economics,” said Ozgo. “Sales volume is tied closely to tax levels. Increasing taxes on beverage alcohol means higher prices and higher prices result in more people out of work at a time when the hospitality industry is really struggling.” As an example, Ozgo pointed to Philadelphia where, based on his analysis, a similar 10 percent sales tax imposed on Philadelphia on-premise establishments has reduced employment by 425 jobs. Ozgo pointed out that raising Pennsylvania’s tax will also put the state at a competitive disadvantage in attracting valuable convention business. “If Pennsylvania loses the business, the hospitality industry not only loses alcohol sales, but meals, hotel and entertainment revenue as well,” he concluded. CONTACT: Lisa Hawkins or Patrick MacElroy Telephone: 202-682-8840 SCROLLER Publication Name: Publication Author:
 

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