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Alcohol tax hike gaining support

More than 140 candidates pledge to back increase

The Gazette
Friday, Sept. 3, 2010
by Jeff Newman | Staff writer

Politicians typically are loath to raise taxes in an election year, but that’s not the case when it comes to Maryland’s alcohol tax.

More than 140 candidates running for the General Assembly have signed on to a proposed dime-a-drink tax increase, with an eye toward using the money for health care for childless adults and programs for developmental disabilities, mental health and addiction treatment and prevention.

The proposal, laid out in a resolution sent last month to candidates for all 188 legislative seats, would raise the state’s alcohol tax, among the lowest in the nation.

The tax hike would bring in $214 million for the state while saving $249 million in health care costs associated with alcohol abuse, said Vinny DeMarco, president of the Maryland Citizens’ Health Initiative, which drafted the resolution. Those estimates are based off a 2009 study by two Johns Hopkins University professors, who found that “alcohol excise tax increases save lives, reduce health care costs, create and preserve jobs, and prevent alcohol-related problems.”

Among the 146 candidates to sign by the Aug. 27 deadline were 63 incumbents– 18 senators and 45 delegates. In addition, 17 candidates who did not sign the resolution supported the tax increase via a Progressive Maryland questionnaire, including Del. Sheila E. Hixson (D-Dist. 20) of Silver Spring, who chairs the House Ways and Means Committee.

But at a time when the nation’s economy still is lagging and the state is facing a budget crisis, some lawmakers remain opposed to any tax hike.

“I don’t think it’s appropriate in this economy to be increasing taxes of any kind,” said House Minority Leader Anthony J. O’Donnell (R-Dist. 29A) of Lusby. “People are out of work, small businesses are having hard time keeping their doors open, and increasing consumption taxes will tend to push people across our borders to do their commerce in other states.”

Alcohol currently is taxed by the gallon– 9 cents for beer, 40 cents for wine and $1.50 for spirits. The proposal would raise the per-gallon rates to $1.16 for beer, $2.96 for wine and $10.03 for spirits, or roughly 10 cents-per-drink for all three, DeMarco said. Rates have been stagnant for spirits since 1950, and for beer and wine since 1972.

Del. Sue Kullen (D-Dist. 27B) of Port Republic said she would not vote for an increase to the alcohol tax if revenues were earmarked for specific purposes, even if they are mental health or disabilities programs, which she supports. Kullen noted she could vote for a general increase to the alcohol tax, but not one as drastic as the dime-per-drink proposal.

Kullen, a developmental disabilities consultant and president of the Maryland Women’s Caucus, signed onto a bill similar to the proposal last session because it was a caucus initiative, but the legislation never made it out of committee.

The increases seem dramatic “because [current rates are] so low, and it hasn’t been raised in all these decades,” DeMarco said. “We have to bring our alcohol tax rates into the 21st century.”

DeMarco expects continued pushback from a “very powerful” alcohol lobby, but thinks the campaign put on by his and other health care advocacy groups, modeled after a successful push for a $1 increase to the tobacco tax in 2007, will bear fruit in the 2011 session. He cited a recent poll by OpinionWorks that shows 71 percent of registered voters support a dime-per-drink tax increase if its revenues are dedicated to health initiatives.

A number of organizations have endorsed the proposal, including the AARP, National Association for the Advancement of Colored People, the American Heart Association, the National Association of Social Workers, Mothers Against Drunk Driving and the Mental Health Association of Maryland.

“I think we are poised in 2011 to enact this life-saving measure,” DeMarco said.”We think the Maryland General Assembly will agree with the people of Maryland that it is good policy and good politics.”

Alcohol tax increase finds ally in Thompson
Posted on Thursday, September 02, 2010 – 01:39 PM
Though General Assembly has killed proposal for eight years, Frederick commissioner sees value in hike
Thursday, Sept. 2, 2010 | By Katherine Heerbrandt, Staff Writer

Frederick County Commissioner John L. Thompson Jr. rarely encounters a tax he can support, but he found one recently in a proposal to substantially raise the excise tax on alcohol.

Taxes on liquor have not been raised since 1955, while taxes on beer and wine haven’t increased since 1972.

And he’s somewhat incredulous of the fact.

Thompson, who is running for the Maryland House of Delegates representing District 4A, is one of 146 state candidates who signed a resolution to raise excise taxes on alcohol and the only Republican to do so in Frederick County.

Excise taxes are in addition to sales taxes, and are generally based on volume sold, so that with inflation the tax rate declines over time.

Of the candidates running for office locally, only Democrats Candy Greenway (a candidate for delegate in District 3A), Paul Gilligan (a candidate for delegate in District 3B), and Don DeArmon (a candidate for Senate in District 3) signed the pledge to support the increase, pushed forward by Maryland Citizens Healthcare Initiative.

DeArmon said he believes that this is a public health initiative that will pay dividends in the future, while his opponent in the primary, Ron Young, said now is “not the time for a tax increase.”

Maryland’s excise taxes amount to less than a penny a drink for beer and less than two cents per drink for wine and liquor, and has third lowest tax rate in the country, behind Washington D.C. and Vermont, according to a March 2010 report from the John Hopkins Bloomberg School of Public Health.

The “Dime a Drink” tax proposes raising per-gallon excise tax on beer from 9 cents to $1.16, on wine from 40 cents to $2.96, and on spirits from $1.50 to $10.03.

Consumers would pay an additional 60 cents for a six-pack of beer, 59 cents for a bottle of wine, and $2.25 on a bottle of liquor. Fifteen percent of the projected $214 million in tax revenue would be dedicated to healthcare priorities.

Thompson engaged in a debate on the issue of alcohol taxes on 930 WFMD’s Mid-Maryland Live radio show recently with Gary Brooks, owner of Barley and Hops on Urbana Pike, just south of Frederick city. He said on the Aug. 26 show that he wanted to “tax it [alcohol] into oblivion.”

Brooks said he believes Thompson is “a teetotaler who wants a return to Prohibition,” and that such an increase will send drinkers over the borders for cheaper booze.

For Thompson, raising the alcohol tax is the only equitable way to shift the tax burden of alcohol-related problems such as crime, drunk driving, domestic violence and substance abuse to those who produce, distribute and drink alcohol.

“Let’s at least raise it enough to cover the direct cost of alcohol abuse programs,” Thompson said. “I have to disagree with my Libertarian friends about increasing taxes and say, tough, we don’t need a society with declining age projections and increasing infant mortality rates.”

As for Brooks’ allegation that Thompson wants to impose his own morality on the industry and consumers, Thompson makes no secret that he sees more bad than good come from drinking alcohol.

“Not everyone is abusing it,” he said in an interview. “But in my experience growing up and as an attorney, I found that it is difficult for people to drink in moderation, human nature being what it is.”

A statewide poll taken earlier this year found that 71 percent of voters favor raising taxes on beer, wine and spirits, with 55 percent saying they “feel that way strongly.” The poll was taken by Opinion Works for Maryland Healthcare Initiative. Opinion Works, a nonprofit marketing research and public outreach group based in Annapolis, interviewed 402 randomly selected voters who said they are likely to vote in the 2010 Maryland general election.

The Maryland General Assembly has not supported a tax increase on alcohol, though it has been proposed every year for at least the past eight years, according to Sen. David Brinkley (R-Dist. 4) of New Market, a member of the Budget and Taxation Committee.

Thompson argues that the alcohol tax has not been increased in so many years because the industry donates money to legislators’ campaigns and hires lobbyists to oppose the increases.

Brinkley’s reasoning for the failure to raise the tax is more direct. “This is the one sin tax that Maryland makes money off of from other states because people come here to buy alcohol,” Brinkley said.

How the money is spent is a hotly debated aspect of the proposed bill. “The fallacy with the argument proposed now is that it will be dedicated to health care,” Brinkley said. “They said the same thing about tobacco, but it all ends up in general fund. There’s the general fund and the transportation trust fund, and nothing else is earmarked money, so they can’t deliver on that promise.”

But DeMarco, believes the time has come, and that the public health benefits outweigh disputes about where the money is going.

Two things, he said, have changed that bode well for passing a tax increase on alcohol. Raising the tobacco tax has reduced teen smoking by 50,000, according to the Maryland Healthcare website. That success has built what DeMarco terms “a powerful coalition” for realizing the same would happen if taxes on alcohol are raised.

“It’s a good public health measure, regardless of how you spend the money,” DeMarco said.

The Hopkins study shows that increasing costs of alcohol in other states leads to a fall in consumption, particularly in younger drinkers.

The report found that one in six Marylanders ages 12 to 20, and 1 in 4 young people in grades 9 through 12 are binge drinkers, consuming five or more drinks within two hours at least once in the past 30 days. “Every year, a third of deaths among 15-20 year olds are caused by alcohol,” the report reads.

But Nick Mannis, spokesman for Maryland Beer Wholesalers, said the industry has done its share to curb underage drinking, too. “Nothing good comes out of underage drinking and our industry knows this better than anyone,” Mannis said. “We do more to deter underage drinking than some of the groups proposing this tax.”

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