Don't Mess With Taxes

I enjoy a beer or a glass of wine now and then. And the last couple of weeks have been crazy enough (out-of-town travel, story deadlines, special events) to drive me to drink.

But I suspect the folks in Massachusetts are thinking a lot more about booze right about now than I am.

That's because Bay State voters will decide on Nov. 2 whether to end the state's sales tax collection on alcoholic beverages in situations where the potent potable is already subject to the state's excise tax.

The excise tax is collected at the wholesale level, but consumers essentially pay for at least part of the levy in a beverage's shelf price. But in 2010, Massachusetts booze buyers also began paying the state's 6.25 percent sales tax on certain purchases of beer, wine and liquor.

Because of the sales tax/excise tax language, Massachusetts Question 1 affects retail sellers of alcoholic beverages, not the cocktails at restaurants and bars. If voters approve repeal of the sales tax on alcohol, the store-bought beverages would be cheaper beginning Jan. 1, 2011.

Frank Anzalotti, from the Committee To Repeal the Alcohol Sales Tax, explains why he and his group support a "yes" vote on Question 1:

Massachusetts' consumers have always paid a substantial excise tax on alcohol purchases. However, before last year, Massachusetts had no sales tax on the purchase of alcohol. The new sales tax should be repealed because it is an unfair double tax; a sales tax on top of an excise tax. The new sales tax has hurt small business owners who sell beer, wine and liquor, particularly near New Hampshire, which has no sales tax on alcohol. Business has declined substantially for many of those stores.

Vic DiGravio, treasurer of the Committee Against Repeal of the Alcohol Tax, discusses why he and his organization support a "no" vote on Question 1:

Alcohol is not a necessity and does not deserve a special tax exemption. The only goods in Massachusetts exempt from the sales tax are necessities like food, clothing and prescriptions. If anything should be taxed, products like cigarettes and alcohol should be. The alcohol tax helps saves lives by reducing teen drinking and funding treatment services to help people beat addictions and get their lives back on track. Nearly every state has a sales tax on alcohol in addition to excise taxes. Massachusetts faces a serious budget deficit; don't give alcohol a special exemption.

The website Massachusetts Election 2010 says that the state's Puritan heritage is alive and well, and makes sin taxes a natural winner. Plus, according to the site, supporters of repealing the sales tax aren't  well organized.

Prediction: Question 1 is likely to be defeated by a wide margin, leaving Massachusetts' sales tax on alcoholic beverages in place.

What I'm wondering is if the pro-tax folks win, will they contribute to Massachusetts' treasury by toasting their victory with taxable beverages?

State booze taxes: Do you know what does your state get each time you lift a glass?

Wyoming residents pay the lowest taxes on beer, according to March 2009 data collected by the Center for Science in the Public Interest (CSPI) as part of its Alcohol Policies Project.

CSPI figures show the best tax bargain for wine (scroll to page 4) is in Louisiana.

And if you want the hard stuff, the CSPI info indicates you should buy it in Washington, D.C., or neighboring Maryland, where liquor excise taxes (keep scrolling) are the lowest in the nation. I am not surprised that folks who live and probably work in or around the halls of Congress need an occasional shot and probably had a hand in keeping those locales' liquor taxes low.

The Federation of Tax Administrators also keeps track of the nation's various taxes. It has the excise tax rates as of Jan. 1, 2010, for beer, wine and distilled spirits.

Related posts:

• Rum tax pits islands against each other
• Roll out the barrel and roll in the taxes
• Nevada decides against taxing one sin
• When being bad pays
• Porn tax proposed in California
• Smoke 'em if you can afford 'em
• The wages of sin is health care
• State tax revenue going up in smoke
• New tax laws now in effect

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