Alcohol tax pits supporters against industry

Posted: 8:02 pm Wed, March 10, 2010
By Capital News Service

ANNAPOLIS — Supporters of a dime-a-drink tax told a Senate committee Wednesday they need the fee in order to provide essential funds for mental health, disabilities and substance abuse programs to Marylanders. But opponents claimed the alcohol tax would deprive retailers of their livelihood in the midst of an economic recession.

The Lorraine Sheehan Health and Community Services Act of 2010, which was presented to the Senate Budget and Taxation Committee, would tax each drink of alcohol an extra 10 cents.

The proceeds of the tax would go towards health care, substance abuse treatment and prevention, and developmental disabilities support, or into the state’s general fund.

The alcohol tax is supported by mental health advocates who have held multiple rallies and events during the legislative session.

“This is not laundry soap,” said David Jernigan, a professor at the Johns Hopkins Bloomberg School of Public Health. “This is a product that has a special tax on it because it brings a special burden on society.”

The tax would lessen problems with alcohol and raise $214.4 million in the first year for disabilities services and other Department of Health and Mental Hygiene programs, according to an analysis by Jernigan and colleague Hugh Waters.

These programs lost $56 million in funding over the past 14 months.

One third of 15- to 20-year-olds’ deaths in Maryland and 1,278 deaths in the state overall are due to alcohol, according to the Hopkins analysis. The paper also estimates 313,000 Marylanders could “fit the criteria for alcohol dependence or abuse.”

“Taxes on alcohol still don’t come anywhere near the costs that alcohol brings on society,” Jernigan said. “Here in Maryland alcohol costs between $3.5 and $5.2 billion a year in social costs, health care and so on. The alcohol tax pays less than one half of one percent of that at this point.”

Opponents said this was the wrong time for the alcohol tax. They said the industry is still recovering from the economic recession and federal tax increases.

Currently, 40 percent of a $13.99 bottle of liquor is federal and state taxes. Under the new proposal, taxes would be $9.62 or 54 percent of the bottle’s cost, bringing the final cost to $17.99.

The alcohol industry insisted that Maryland would be losing revenue and “good workers” would be hurt.

Former Gov. Marvin Mandel, who said he was at the hearing representing alcohol interests, reminded the committee of the “trade wars” with Washington that occurred while he was in office. Mandel said that Maryland and the District agreed to keep their alcohol taxes the same so they wouldn’t steal each others’ business.