- The Washington Times - Saturday, March 21, 2009

Maryland lawmakers this week floated the idea of raising alcohol taxes for the first time in decades to raise funds for health programs facing cutbacks because of a $2 billion budget shortfall.

The bill would quadruple the excise tax on alcoholic drinks. Taxes on beer would rise from 9 cents per gallon to 36 cents. The tax on distilled liquor would increase from $1.50 per gallon to $6 and the levy on a gallon of wine would rise from 40 cents to $1.60.

Lawmakers say the tax increase would be equivalent to paying 5 cents more per drink. It would be the first tax increase on beer since 1972 and the first on liquor since 1955.

“I was a first-grader in 1972, that’s how long it’s been,” said Sen. Richard S. Madaleno, Montgomery Democrat and a member of the Senate Budget and Taxation Committee, who is a sponsor of the bill.

The tax would generate up to $100 million a year in revenue, about a third of which would go to state services for those with developmental disabilities, with another third going to alcohol and drug addiction programs, supporters say.

“We are entering a potential collapse for many of these services, and thousands of families in our state will collapse as a result,” Mr. Madaleno said.

Alcohol abuse costs the state economy $3.5 billion every year, and for every dollar spent on addiction treatment and prevention, the state is saved $12 in criminal justice, health and medical costs, he said.

“It’s time we raise the tax and help people live,” he said.

Part of the revenue would go to help reduce a 19,000-member waiting list for people with developmental disabilities. Christine Marchand, executive director of the Arc of Maryland, said with the current budget for fiscal 2010, only 40 people of those 19,000 would be taken off the list. Revenue from the tax increase would go to help about 1,000 people on the list, she said.

“That’s only half of those families who are in crisis,” she said. “There’s been very little money for people on the list and as a result it’s just grown.”

Lawmakers have proposed some sort of tax increase on alcohol almost annually since the last hike. But the bill faces stiff opposition from the powerful alcohol and restaurant lobbies, who say the increase would be disastrous to the service industry in Maryland.

Dwayne Kratt, a representative of Diageo, one of the world’s largest alcohol distributors, said because of the recent economic downturn many people have simply stopped going out to eat and drink, and that a tax increase would make the situation even worse.

“Our challenges as an industry are just the tip of the iceberg and it’s for one simple reason, people aren’t going out, and when they do they don’t spend,” he said.

Sales of alcohol products could dip as much as 20 percent because of the tax, opponents say.

Melvin Thompson, vice president of the Maryland Restaurant Association, said his industry is taking a hit because of the worsening recession, and that while the tax revenue would go to a good cause, sticking the bill to customers was not “the right way to go.”

“It’s a tough time right now for our industry,” Mr. Thompson said. “The last thing [restaurant owners] want to do is discourage customers from dining out.”



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