Alcohol Tax Debated in States Across the Nation

It's not the lagging economy that's caused his small business to lose $250,000 in revenue and its staff to shrink from 14 to nine employees, says James Alexander.

It's the state sales tax, claims the owner of Winchester Wine and Spirits in Winchester, Mass.

In August 2009, the Massachusetts legislature voted to subject alcohol sold in retail stores to the state sales tax. Previously, wine, beer and liquor (already subject to an excise tax) purchased in stores were exempt.

So Alexander will be sure to vote "yes" on Question 1 on Nov. 2. He's already posted statements on his Facebook page in support of it. The initiative asks Massachusetts voters if they would like to exempt alcohol from the sales tax.

"I can understand why you need sales taxes, I really can," Alexander told

But, he added, "It was painful knowing this tax has laid good people off."

Last year, a Friday night would have brought about 1,000 people through the doors of the shop, he said. On one Friday earlier this month, only 575 customers came in.

Instead, customers drive to New Hampshire, where alcohol isn't subject to a sales tax.

States Re-Examining Tax on Alcohol

A well-publicized initiative in California, which failed to get enough signatures to put it on November's ballot, sought to increase excise taxes on alcohol dramatically -- from 11 cents to $6.08 on a six-pack of beer and from four cents to $5.11 on a bottle of wine. Supporters hope it will appear on the 2012 ballot.

Virginia is considering adding a fee onto alcohol sold in bars and restaurants as it looks at privatizing state-run liquor stores.

Officials in Oklahoma recently have proposed a tax increase to the state legislature that would help offset the fiscal budget.

And in Maryland, there's the "dime a drink" proposed tax. The move would increase the tax on alcohol proportionally to how many servings the container holds. A six-pack of beer would be subject to a 60-cent increase.

"Beer is Cheaper Than Milk"

Vincent DeMarco, president of the Maryland Citizen's Health Initiative, a non-profit organization that seeks to improve public health, said the state's general assembly will vote on the initiative early next year. For now, he said, the proposed tax is fueling debate among residents.

The tax, he told, is designed to combat drinking in excess. The money collected would be used in part to fund alcohol-abuse treatment programs.

"It's a win-win situation," he said. "Alcohol-related problems decrease, and government revenue for special programs increases."

The initiative worked with Johns Hopkins University associate professor David Jernigan, who studied how behavior is related to alcohol taxes. Jernigan's research shows that with a heightened alcohol tax, people drink less, and, subsequently, alcohol-related deaths and accidents decrease.

"We all suffer when there is alcohol abuse," DeMarco said.

Jernigan said the tax is "long overdue" because Maryland has one of the lowest tax rates on alcohol in the country. Taxes haven't been raised on wine and beer since 1972, and spirits haven't been subject to an increase since 1955, he said.

"It may hurt the alcohol business, but, frankly, that's the point," he said. "In our state, beer is cheaper than milk. It's cheaper than orange juice. Sometimes, it's cheaper than water. That is a terrible message to send people."

Jernigan said the tax will not threaten Maryland's economy.

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