Dime-A-Drink Tax Hike Again Proposed

OCEAN CITY – A movement to hike the alcohol tax in Maryland, called the “dime a drink” tax by proponents, appears to be gaining momentum again as the opening of the General Assembly session nears next week.

With the support of a vast coalition of advocacy groups, armed with an updated report released this week by Johns Hopkins University’s Bloomberg School of Public Health, an increasing number of state lawmakers are proposing to renew legislation calling for a substantial hike in the alcohol excise tax in the upcoming session. Although the legislation has not been pre-filed, a growing number of legislators are getting behind a renewed Lorraine Sheehan Health and Community Services Act of 2011.

On the surface, the increase is expected to reduce consumption, thereby reducing alcohol dependence, drinking and driving and a wealth of other alcohol-related health issues in the state, but the underlying reason is purely financial. With the sluggish economy and a growing state deficit, state lawmakers are exploring all means to increase revenue, and adding a dime a drink tax on alcohol purchases is expected to raise an estimated $214 million in new revenue.

In addition, the Bloomberg study released this week anticipates the alcohol excise tax hike would save another $249 million annually in healthcare costs, avert 15,000 cases of alcohol abuse, 316 assaults, 67 incidents of severe violence against children and 37 premature deaths every year.

Advocates for the plan point out there appears to be room to grow in the state’s alcohol excise tax structure. The tax on distilled spirits in Maryland has not been increased since 1955, while the tax rate on beer and wine was last raised in 1972. It’s important to note other tax increases over the years, such as sales tax and other licensing and permit fees, have steadily increased over the years, raising the cost of a drink in kind, but consumers in Maryland currently pay about a penny in taxes per drink and increasing the tax to a dime a drink represents an increase of 1,000 percent.

According to the proposed legislation, the existing alcohol tax would continue to be dedicated to the state’s general fund, while the increase would be dedicated at specific programs including the Development Disability Support Fund, the Addiction Treatment and Prevention Fund, the Mental Healthcare Fund and the Maryland Medicaid Trust Fund.

Meanwhile, those on the front lines of the alcohol industry in Maryland are fairly adamant in their opposition to the alcohol excise tax hike. For example, the Restaurant Association of Maryland (RAM) said an increase in the alcohol tax could severely harm and industry already under assault by increased taxes, regulations and license fees.

“For many smaller establishments without high-volume capacity, alcohol sales help to keep them afloat,” the RAM statement reads. “A significant increase in alcohol taxes, as proposed by this legislation, would force restaurant and bar owners to pass the cost of this increase onto customers.”

Closer to home, Worcester County Licensed Beverage Association (WCLBA) members remain unified in their opposition to the proposed tax hike, just as they were a year ago when the legislation did not pass.

“Right now, we’re adamantly opposed to any new taxes,” said WCLBA President Doug Buxbaum. “Each year this comes up and each year it seems to get a little more momentum.”

Buxbaum said the “dime a drink” increase doesn’t sound significant, but it equates to $2.30 more per bottle for the licensees and retailers.

“For us, it seems a lot like double taxation,” he said. “It’s a cost some of our small businesses might not be able to absorb.”