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Alcohol tax increase finds ally in Thompson

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.”