Maryland Lawmakers Consider Dime-a-Drink Alcohol Tax

Maryland may raise alcohol taxes for the first time since 1972 by a dime a drink, reported Jan. 14.

Maryland last raised its tax on beer and wine in 1972, and its tax on spirits 54 years ago, in 1957. Its wine tax ranks 37th-lowest in the nation, its beer tax 44th, and its tax on spirits 47th.

Some legislators said the tax could partially offset the state’s $1.6 billion deficit and reduce alcohol abuse and alcohol-related costs.

The “dime a drink” tax increase could reduce alcohol consumption by 4.25 percent, raise $215.6 million new revenues for the state, and result in a savings of an additional $225.2 million in costs incurred in the state as a result of alcohol consumption, according to a report co-authored by experts at the Johns Hopkins Bloomberg School of Public Health and Boston University School of Public Health.

Surveys conducted for the Maryland Citizens’ Heath Initiative indicate that if revenue from the proposed alcohol tax were directed to health programs, two out of three citizens would support it, and 75 state lawmakers say they would vote for such a proposal. 

Other legislators disagree. Thomas V. Mike Miller, president of the Maryland Senate, said the alcohol tax proposal “is not going to happen,” the Baltimore Sun reported Jan. 12.

Opponents of the tax include restaurant owners and alcohol distributors, who said it will be damaging to small businesses and raise consumer prices. 

“Whether it’s a ’sin tax’ like an alcohol tax or otherwise, it looks like something to hurt small businesses, like tavern owners and restaurants,” said Maryland lawmaker Charles Otto, R-38A-Somerset, explaining why he would vote against it. 

Terry Loughlin, who represents Carey Distributing in Fruitland, Md., said higher taxes would be passed along from the distributor to the retailer and the consumer. “The bottom line is the consumer is going to pay more,” he said.

David Jernigan, Ph.D., lead author of the Johns Hopkins report, said that consumer prices would not necessarily go up. The study, “The Potential Economic Effects of Alcohol Excise Tax In Maryland” (PDF), found that other states, like Virginia and Delaware, had high taxes on alcohol, but their retail prices were among the lowest in the nation.

“The bottom line is we didn’t find a correlation,” Jernigan said.

Jernigan and colleagues found that every year an alcohol tax would prevent hundreds of violent acts, nearly 15,000 cases of alcohol dependence, and it would lower underage drinking.

“It’s basic economics. You raise the price, and the demand will go down some,” he said.

The president of the Maryland Citizen’s Health Initiative, Vince DeMarco, said the tax was long overdue. “Richard Nixon was vice president when spirits were raised, and president when beer and wine was raised,” he said.

Correction, Jan. 31, 2011:
The original summary included data from a previous version of the John Hopkins report (Jernigan and Waters, 2009). Data from the updated report is incorporated now in the summary (Jernigan, Waters, Ross, and Stewart, 2011). 

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