The Fourth of July will be here before we know it, along with parades, fairs and backyard barbeques. This year, it will also include more expensive adult beverages, as an increase on the state’s alcohol tax is set to take effect just before the holiday weekend, on July 1.
I strongly opposed the tax hike during our most recent legislative session.
At the start of the past session, advocates seeking an alcohol tax increase sought to increase alcohol costs by a “dime a drink, with a link.” The 10 cents per drink increase would have been accomplished by raising the state’s excise tax (at the wholesale level, an equal increase on all of drink regardless of price) on alcohol.
The “link” would have been to use nearly half the revenues to expand Medicaid for childless adults and to fund services for the mentally disabled as well as programs for drug and alcohol addiction.
An alcohol tax increase emerged, but in a different form: increasing the sales tax on alcohol from 6 to 9 percent. Ironically, the proposal to alter the alcohol tax was not presented until after a balanced budget had already been passed, making any new revenue was unnecessary.
As passed in the Senate, the increase was phased in over three years at a rate of 1 percent per year. Making matters worse, as the budget was already balanced, the proposal directed most of the approximately $30 million in new revenues to operating expenses in Baltimore City and Prince George's County Schools, to the tune of $8 and $12 million, respectively—$5 million was dedicated to the developmental disability community.
When the House considered the proposal, they not only approved the Senate idea but opted to approve the full 3 percent increase at one time, planning to use the remainder of the “new” money (the other 2 percent) toward school construction in select jurisdictions.
I was appalled. As Chairman of the Baltimore County House Delegation, I asked the County Executive’s staff to provide hearings for our delegation. In this process, we learned that Baltimore County is a major seller of alcohol in the state, ranking number one in overall beer sales and number two in wine and distilled spirits sales—yet stood to gain nothing.
As a result of our efforts, Baltimore County was given $7 million in school construction money, though it was still no reason to support the increase, and still short of what was awarded to Baltimore City (an additional $9 million), Prince George’s County (an additional $9 million), and Montgomery County ($9 million).
Only $15 million was dedicated to the mentally disabled community, and that funding is only guaranteed for a few years.
Sadly, what was once a plan to address alcohol abuse and help fund needs of the mentally disabled community turned into a money grab. As a result, those voting “yes” not only provided new obstacles to our small businesses and hospitality and tourism industries, but also veered far off course from the original “with a link” proposal.
Moreover, a sales tax (rather than an excise tax) increase means that consumers can expect to pay more than a dime more for many drinks (a $5 drink, for example, will now cost 15 cents more). For all of these reasons, it was easy for me to vote against this tax increase.