OCEAN CITY – Local businesses expressed frustration this week as they prepared to implement the alcohol tax increase approved by the legislature earlier this year.
In April, the Maryland General Assembly approved a 50-percent increase in the sales tax on alcohol in the state. The legislation will increase the sales tax rate on alcohol in Maryland from 6 percent to 9 percent. The tax hike projects around an $85 million increase for the state’s general fund, portions of which will be dedicated to public school construction and disability programs.
“When the bill first passed, the main thing I was hearing was that it is crazy how much money is going away from here, that we’re generating a lot of the revenue but not receiving much of the benefits,” Ocean City Hotel-Motel-Restaurant Association Executive Director Susan Jones said. “The initial reaction was why are we getting taxed again and why are they targeting the industry again, and secondly how much is going to Prince George’s and Baltimore.”
Baltimore City, Prince George’s County and Montgomery County will share the majority of the tax increase proceeds, which is around $27 million. The counties on the Eastern Shore including Worcester will share just $156,000.
The increase in alcohol tax has left businesses having to fend for themselves in having to go through the frustrating process of accounting for the tax changes. The majority of restaurants and bars use digital registers, or point of sale (POS) software, to place food and beverage orders these days as well as complete sale transactions.
Establishments are finding they either have to make system changes in house, which is time consuming, or hire an outside company, which is an additional expense.
Micky Fins General Manager Gary Beach explained his establishment’s digital register system, Aloha, has a tax rate set for each category of items the restaurant sells. For example, the tax rate can be set separately for food, beverages, alcohol or retail.
Prior to the changeover this weekend, all of the categories were set for the state sales tax rate of 6 percent. Making the change to reflect the new tax rate is a matter of changing the rate for the alcohol category.
“When our guests look at their receipt, they will see one tax rate on the food and other goods they bought, along with a separate line reflecting the tax on the alcohol,” he said.
Beach said the process to the change the tax rate was fairly easy but time consuming. At this point, he has it ready to go so on Friday and he only has to reset the computer.
“I just have to go in and change the six to a nine in the alcohol category,” he said. “But before I could do that, I had to go back in and change the rate on every single item in our computer system that contains alcohol.”
Doug Buxbaum, owner of Buxy’s Salty Dog Saloon, had to hire outside help to increase the alcohol tax in his POS system.
“Just like everyone else, I have had to do what the law requires and unfortunately it comes with a cost,” he said.
Buxbaum said he is preparing for the complaints over the increase in alcoholic beverage prices.
“I feel that we’re all going to have our ears bent,” he said. “There is going to be some obvious price increases with this new tax and us being the last line of defense to the customer we are definitely going to hear it.”
Buxbaum said “without a doubt” the increase is going to negatively affect Ocean City’s economy by tourists cutting their budgets while on vacation.
“Our legislators decided that this was a solution to get our state out of debt, so be it,” he said. “It’s unfortunate that it always seems to be in the bar or restaurant.”
Greene Turtle West General Manager Chad Rogers said he and his staff have been preparing for the tax increase since March and customer complaints over price increases have already started.
“The thing that I don’t think the people in Annapolis understand is that it’s not like we can get on our computers and do it ourselves,” Rogers said. “We have to bring somebody in to do that, which is probably going to be $150 to $250 for the whole process.”
Rogers believes the legislature was reckless in making the speedy decision in raising the alcohol tax.
“You got people making decisions that are looking out for their best interest and not for the best interest of the people that put them in the government,” he said.
Rogers asserted that the increase is another addition to other rising prices that are affecting Ocean City. He believes additional expenses are going to add up on vacationers and they’re going to cut back on their spending.
“I tell you if you’re going to own a business you better have it in Delaware right now or in Wicomico County at least,” he said. “We’re taking the loss more than the customer … But then again on the flip side you got to make it work and we will make it work. We’ll deal with it and move on. You can’t let it bog you down.”