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Ways and Means hears alcohol tax plan

Baltimore Sun
April 8, 2011

Delegates this morning quizzed senate sponsors of the proposed alcohol tax about whether the three year phase in period could be deleted and the entire hike could be implemented in a single year. The committee has not yet voted on the bill.

The Senate-passed version of the measure bumps up the state sales tax on alcohol from 6 percent to 9 percent over three years. Senators want to use the revenues in the first year to fund health care for the developmentally disabled and provide a one-time grant to schools in Baltimore and Prince George’s County.

The proceeds are not required to balance the budget.

Del. Joline Ivey, a Democrat from Prince George’s County, noted that the “psychological impact” of raising the tax over three years might cause fatigue. “Post all of it at once,” she said.  Ivey said that the phased-in approach could be problematic to retailers who would have to recalibrate their cash registers three years in a row to accommodate the slowly rising tax.

Sen. Richard Madaleno, a sponsor on the tax, noted that there isn’t a lot of time left to make wholesale changes to the bill. “It is a little late in session to go a different direction,” Madaleno said. “There are 96 hours left.”

Opposition to the measure is also jelling. The Restaurant Association of Maryland opposes the bill now, arguing that reprogramming cash registers to accommodate rate increases could cost anywhere from “$300 to several thousand dollars.”

Lobbyists from Maryland’s liquor industry, who initially held their tongues on the legislation, are now opposing it because of the expected loss in alcohol sales. A legislative analysis estimated that there would be an 8 percent reduction in the purchase of spirits, three percent reduction in wine sales and a 3 percent reduction in beer sales.