By Len Lazarick
Maryland’s first alcohol tax increase in 39 years easily passed the Senate Budget and Taxation Committee in a 9-4 vote, putting an extra 3% sales tax on all purchases of beer, wine and liquor.
The new tax will go up 1% a year for the next three years, raising an estimated $88 million by fiscal 2016, with some of the money going to public schools and services for developmental disabilities.
The special tax, on top of the 6% sales tax already on the books, replaces a proposal for a much higher dime-a-drink proposal that would have been paid by the distributors. The new tax will be paid directly by consumers at liquor stores, bars and restaurants.
“I think this is a good alternative,” said Sen. Verna Jones-Rodwell, a Baltimore Democrat who sponsored both tax hikes. “I think it’s going in the right direction.”
The new tax, which was introduced just Monday, is modeled after the District of Columbia’s tax structure.
The three Republicans on the committee said this would adversely affect merchants near the borders of Pennsylvania, Virginia and Delaware. Anne Arundel Sen. James Ed DeGrange, the only Democrat to oppose the tax, said that the D.C. levy was largely paid by visitors to the capital, and the committee was not looking at its impact on small business and restaurants in Maryland.
Sen. Richard Madaleno, a sponsor of the tax hike, said there were already many residents of neighboring states coming into Maryland to buy alcohol, taking advantage of some of the lowest alcohol taxes in the nation. This explains why Cecil County — near Philadelphia and Wilmington — had the highest per capita liquor sales in the state.
“We’re going to remain very competitive,” Madaleno said.