Md. Assembly likely to raise beer, liquor tax

Miller: New levy ‘modest’

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ANNAPOLIS | The Maryland Senate is poised to hand residents their first, and maybe be their only, tax increase of 2011 — a 3 percentage-point increase on booze that over the next few years will add about 80 cents to a case of beer or fifth of top-shelf liquor.

Supporters of the Democrat-sponsored legislation argue the state’s alcohol sales tax has not changed since 1955 and that lawmakers are unlikely to pass proposed taxes this session on such items as gasoline, snacks and grocery bags.

They also contend that the legislation, which would be added to next year’s $34.2 billion state budget, would generate roughly $90 million more in annual revenue by 2014 and would be only a minor strain on taxpayers’ wallets.

“It’s a modest alcohol tax,” said Senate President Thomas V. Mike Miller Jr., Prince George’s Democrat. “I think that’s about all we’re going to do this year in terms of taxes.”

The bill sponsor, Sen. Verna L. Jones-Rodwell, said the revenue will go a long way toward services facing cutbacks, including public education, as lawmakers try to reduce Maryland’s $2 billion budget gap.

“It will bring additional resources into the state,” said Mrs. Jones-Rodwell, Baltimore Democrat. “It will produce revenue so that we can support some of these services that have been cut.”

Under the plan in the Senate Budget and Taxation Committee, the tax would increase 1 percentage point in each of the next three years. The Senate would merge the plan with the House version of the budget. The House tentatively passed its version Wednesday night without additional amendments and is expected to cast finals votes Thursday or Friday.

The House briefly considered a so-called “dime-a-drink” tax that would have exponentially increased the alcohol tax on wholesalers, with per-gallon taxes increasing from 9 cents to $1.16 on beer, 40 cents to $2.96 on wine and $1.50 to $10.03 on distilled spirits.

That proposal would have generated an estimated $200 million in revenues, but opponents argued the costs would have been passed almost entirely from wholesalers onto consumers.

The 3 percentage-point sales-tax increase, offered in recent weeks as an alternative to the House proposal, is modeled after a similar law in the District.

Maryland legislators and activists acknowledged they were unaware of the D.C. law until just weeks ago, and the Senate only introduced its legislation Monday.

While Mr. Miller and other leaders of the Democrat-controlled General Assembly said the alcohol proposal will probably be this year’s only new tax, the budget include several new fees that critics say are the same as taxes.

The fees, approved last week by the House Appropriations Committee, would increase costs for vanity-license plate, from $25 to $50; vehicle titles, from $50 to $100; and property-tax records, from $20 to $40.

“Fees are taxes, we’ve learned, and we continue to be reminded over the coming years,” said House Minority Leader Anthony J. O’Donnell, Calvert Republican. “We don’t have a revenue problem … We have a spending problem, and this budget doesn’t address our overspending.”

The alcohol-tax increase draws support from health- and safety-advocacy groups that say the increase in prices will result in fewer sales, which will result in fewer crimes, vehicle accidents and illnesses, including liver failure and birth defects.

Revenue from the dime-a-drink tax was marked for health programs. However, the Senate tax would go into the general fund and perhaps include some health initiatives.

Sen. Richard S. Madaleno Jr., Montgomery Democrat, said the added tax revenue would be largely used to fund health programs.

“There are growing health needs,” said Mr. Madaleno, a member of the Senate Budget and Taxation Committee. “There seems to be a strong nexus between this source of funding and the programs that need assistance.”

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