March 31, 2011

Senate sends 3% alcohol tax to House

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By Len Lazarick
Len@MarylandReporter.com

Senate chamber

Senate chamber

The Senate passed a new 3% sales tax surcharge on alcoholic beverages, bringing the total to 9% sales tax on beer, wine and spirits. The vote was 27 to 19, with eight Democrats joining 11 Republicans in opposing the measure.

The bill now heads to the House of Delegates, which has not had a hearing on this version of the alcohol tax hike. However, two House leaders say the House is still likely to support it.

The sales tax was only introduced in the Senate 10 days ago. The legislation is structured like a similar tax in the District of Columbia, but differs markedly from the dime-a-drink tax pushed by advocates for health care and the developmentally disabled.

The extra sales tax is phased in 1% a year over three years, and will be collected by bars, restaurants and liquor stores. It raises an estimated $88 million in the third year. That’s less than half the $200 million the dime-a-drink tax would have collected from distributors of beer, wine and liquor.

The liquor lobbyists who fiercely fought the original excise tax have been largely muted in their opposition to 3% sales tax, particularly the representatives of wholesale beer and liquor distributors, who would no longer be saddled with paying it.

The advocates who had campaigned for dime-a-drink for 18 months are supporting the measure, even though it will give just $5 million of the $29 million it will raise in the first year to reduce the thousands of people on the waiting list for disability services. The rest of the money goes to the school systems in Baltimore and Prince George’s County.

“I think it probably has a decent shot in here,” said House Majority Leader Kumar Barve, a member of the Ways & Means subcommittee on revenues. In a MarylandReporter.com video last week, Barve said the alcohol levy was the only tax hike likely to pass this session.

House Majority Whip Talmadge Branch of Baltimore, also on the revenues subcommittee, said, “I don’t think it’s going to be much of problem” passing it in the House committee.

“It puts us in line with Washington, D.C.,” Branch said. “I don’t see business people getting all excited about it.” On the other hand, the dime-a-drink proposal was “a bit of an overkill.”

Comptroller Peter Franchot has said since the beginning of session that he opposed any new taxes. But Franchot spokesman Joe Shapiro said Franchot “is 100% confident that we will be able to enforce any tax that is passed.”

Voting FOR the tax were 27 Democrats: Miller, Benson. Conway, Currie,Freguson, Forehand, Frosh, Garagiola, Gladden, Jones-Rodwell, Kasemeyer, Kelley, King, Madaleno, Manno, McFadden, Middleton, Montgomery, Muse, Peters, Pinsky, Pugh, Ramirez, Raskin, Robey Rosapepe, Zirkin.

Voting AGAINST the tax were eight Democrats (D) and 11 Republicans : Senators Astle (D), Brinkley, Brochin (D), Colburn, DeGrange (D), Dyson (D), Edwards, Getty, Glassman, Jacobs, Kittleman, Klausmeier (D), Mathias (D), Pipkin, Reilly, Shank, Simonaire, Stone (D), Young (D).

  • Abigail Adams

    The culture of corruption continues to reign in Maryland. Senate Democrats promote this as a help for “the children” but Balto City & PG County budgets will reap the rewards. Will these taxes directly help the school children or be used to pad adinistrative saleries at the boards of ed? As a lifelong resident, I’d guess that the kids won’t see a dime.The disability community should be ashamed to support this highway robbery.