BERLIN – With the release two polls suggesting a great majority of the residents of Maryland support a proposed “dime a drink” hike, a proposed alcohol tax increase appears to be gaining some momentum in Annapolis, but the measure is still fiercely opposed by business owners in the hospitality-rich resort area.
The results of a National Council on Alcoholism and Drug Dependence of Maryland poll released this week suggest 72 percent of Marylanders support a proposed tax increase on alcohol, especially if the revenue generated is directed at support for addiction programs, developmental disabilities, mental illness and health care for the uninsured. The poll was conducted to gauge the public’s support for a pair of bills circulating in the Maryland General Assembly.
Additionally, a new poll by Opinion Works released by the Maryland Citizens’ Health Initiative on Monday found 71 percent support the tax increase. The survey polled 402 randomly-selected registered voters in Maryland. Interviews were conducted by telephone last month.
The so-called Lorraine Sheehan Health and Community Services Act of 2010 has been filed in both the House and Senate with dozens of state lawmakers signing on as co-sponsors. While no action has been taken on either side of the aisle, the bills appear to be gaining some momentum with the release of the poll results this week.
“It’s clear that the citizens of Maryland support additional funding for addiction services and favor the alcohol tax as a mechanism to pay for it,” said Dr. Nancy Rosen-Cohen, executive director of the National Council on Alcoholism and Drug Dependence of Maryland.
With the state facing an estimated $2 billion deficit, state lawmakers are exploring any means to increase revenue and adding the estimated “dime a drink” tax on alcohol purchases could raised an estimated $200 million for state coffers. According to the bill’s sponsors, the money raised would pay for programs to prevent and treat substance abuse and fill funding gaps for health services related to alcohol consumption.
“The budget is such a critical issue that a majority of those polled think that the government leaders who are against raising taxes should make an exception and increase the alcohol tax,” said Rosen-Cohen. “Creative budget solutions like a tax on alcohol are needed in today’s economic climate when services are underfunded and budgets are being cut.”
Advocates for the plan point out there appears to be room to grow in the state’s alcohol excise tax structure. The tax on distilled spirits in Maryland has not been increased since 1955, while the tax rate on beer and wine was last raised in 1972. It’s important to note other tax increases over the years, such as sales tax and other licensing and permit fees, have steadily increased over the years, raising the cost of a drink in kind, but consumers in Maryland currently pay about a penny in taxes per drink and increasing the tax to a dime a drink represents as increase of 1,000 percent.
An increase in the tax on alcohol would ultimately be borne by the consumer, and in Ocean City, where the public perception suggest things have gotten too expensive already, adding a dime to the cost of a drink could be too much to bear for some local businesses.
“With Ocean City being a resort area, we really have about three or four months out of the year to make it,” said Travis Wright, owner of The Shark in West Ocean City. “Our profits margins are squeezed pretty tight already. Raising the liquor tax could be especially tough on a destination resort like ours. I think the way our county is with a dispensary system, we’re already paying more than most of the rest of the state.”
Worcester County Licensed Beverage Association Director Doug Buxbaum, owner of Buxy’s Salty Dog, agreed increasing the tax on alcohol could add to the perception Ocean City is getting overpriced as a resort destination.
“We’re obviously adamantly opposed to it,” he said. “This proposal could be seriously detrimental to the small business guys. We’re fighting to bring people to Ocean City, but what we hear all the time is how expensive everything has gotten.”
Despite facing an enormous deficit, many state lawmakers have said any tax increases will likely be off the table going into the current General Assembly session, largely because most residents are already struggling in the current economy, and, no less important, it is an election year. Another local business owner, Chris Wall of Harborside in West Ocean City, suggested lawmakers stick to their promise and avoid raising the tax on alcohol.
“Sounds like we should hold them to their word, even if they are politicians,” he said. “A tax is a tax, and they said they wouldn’t consider any new tax increases this year.”
Wright agreed, saying the proposed dime hike did not seem substantial at first glance, but the increase could add an undue burden on the businesses and the consumers.
“Adding a 10-cent tax on to the cost of a drink might not seem like much, but is has to be passed on to the consumer,” he said. “I think they need to find a way to balance the budget without raising taxes.”