January 5, 2011

Supporters of dime-a-drink tax hike believe they’re getting closer to victory

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By Len Lazarick
Len@MarylandReporter.com

Supporters of a major increase in alcohol taxes to support health care believe the election results, legislative committee assignments and a new poll have put them close to their goal of a “dime-a-drink” tax hike.

“We think we’re close to majorities” in both the House Ways & Means Committee and the Senate Budget and Taxation Committee, said Vincent DeMarco, president of the Health Care for All Coalition.

The Nov. 2 election produced 20 senators and 64 delegates who either signed a pledge or indicated their willingness to support a dime-a-drink tax hike, near a majority in the 47-member Senate and 141-delegate House. State excise taxes on beer and wine haven’t gone up in 39 years, and there’s been no tax hike on spirits for 56 years.

A solid two-thirds of voters in a poll finished last week said they favored “an increased tax of 10 cents per alcoholic drink if the money was dedicated specifically to alcohol and drug treatment and prevention, health care for the uninsured , training for health care workers, and programs for people with developmental disabilities and mental health needs,” according to Steve Raabe of Opinion Works, citing the exact wording of the question. In the survey of 663 registered voters Dec. 20-28, 45% said they “strongly favor” the proposal.

“In this economy, to have this sort of support is extremely significant,” said Raabe who has polled for the Baltimore Sun, the Chesapeake Bay Foundation and other organizations.  People are loath to fork over more money to the state for anything, Raabe said, but this dedicated tax is a clear exception to the prevailing anti-tax mood.

Professor David Jernigan of the Johns Hopkins Bloomberg School of Public Health said in an updated report that the alcohol tax hike would raise $215 million, while it would cut liquor consumption and save $225 million to Maryland’s economy. He said those who engage in “risky” drinking would pay the bulk of the new taxes, with social drinkers paying about $11 more per year.

“Productivity gains alone will exceed any job losses in the alcohol industry,” Jernigan said. “Cross-border shopping will have an insignificant impact” on those who sell beer, wine and spirits in Maryland, he said.

The retail, wholesale and restaurant industry in Maryland have already begun organizing to oppose the tax hike.

The Distilled Spirits Council launched a harsh attack on Jernigan, saying his research has been cited as “flawed” by Federal Trade Commission and others in academia.

“To call a distilled spirits tax increase simply a dime-a-drink, as cited by Jernigan, is absurd,” Jay Hibbard, vice president of the Distilled Spirits Council, said in a statement. “Any economist will tell you it translates to dollars per bottle – an increase that severely punishes businesses that purchase alcohol in cases. Jernigan’s anti-alcohol lobbying is not a substitute for science and certainly not for economics.”

“Forcing thousands of waiters, waitresses, bartenders and busboys into the unemployment line is no way to prop up the state’s health care system,” Hibbard said. Maryland’s excise tax on a gallon of spirits would be over $10, on top of federal taxes, the state sales tax and local liquor fees.

Sen. Richard Madaleno, D-Montgomery, who will sponsor the increase, said there has been “an interesting change in tone from the [legislative] leadership” about the tax, showing that previous opposition has softened.

As he campaigned for re-election this fall, Madaleno said constituents would tell him: “This is a tax I can support.”

Currently, the state tax is 9 cents per gallon on beer, 40 cents per gallon on wine and $1.50 per gallon on spirits. The increase would add roughly 10 cents per “drink” across the board. While this seems small, calculations have shown that the actual taxes would increase by 700% to 1,300%.