Massachusetts Question 1: Sales Tax on Alcoholic Beverages: //php get_posflags()?>
Posted on | October 12, 2010
Written by | Robert Dwyer
Why Deciding How to Vote is Harder Than You’d Think
History tells us Massachusetts voters are willing to support tax increases, especially when they’re convinced it’s for a good cause. Need to build a new high school in your town? Chances are the tax increase will find support because folks in Massachusetts think highly of public education - especially in their own towns. What about a tax on alcohol earmarked for behavior health services? Do voters support funding these programs with an alcohol tax? We’ll find out November 2nd when voters cast their ballots on Question 1: Sales Tax on Alcohol Beverages.
Massachusetts hasn’t had a sales tax on alcohol since prohibition. Amidst an economic downturn in 2009, the state legislature decided to raise the sales tax rate from 5% to 6.25% and make alcoholic beverages subject to sales tax for the first time. Massachusetts retailers, especially those near the borders, say their business has suffered as a result.
Those opposed to repealing the alcohol tax say alcohol isn’t a necessity and does not deserve a special exclusion. They say revenues from the tax provide dedicated funding for more than 100,000 residents with behavioral health problems. Further, they point out that nearly every state has sales tax on alcohol in addition to an excise tax.
Those in favor of repealing the alcohol tax point out consumers have always paid a substantial excise tax. They consider the sales tax an unfair double tax since the excise tax is subject to sales tax. They suggest a vote to eliminate the sales tax on alcohol is a vote for to help small businesses.
Another way to look at this is to compare Massachusetts’ overall tax rates on alcohol. According to The Tax Foundation the state’s excise tax is surprisingly low. Compared to other non-control states, the Massachusetts beer excise tax ranks 10th lowest out of 42 states. Wine is 18th lowest out of 41 states, and spirits is 17th lowest out of 28 states. The other states in this comparison all charge sales tax on alcoholic beverages.
That’s pretty compelling evidence in favor of maintaining the taxuntil you consider that a state’s overall tax revenue is comprised of all the taxes its citizens are subjected to: Income tax, property tax, motor vehicle excise tax, tolls, etc. No single tax should be viewed in isolation of others. In this context we should ask: Did the appropriate tax rate for alcoholic beverages suddenly change in 2009? Or did the state’s need for revenue suddenly change? I would argue it’s the latter, and a yes vote on 1 is a way to roll back that mistake.
My view? If funds are needed for state-operated rehabiliation programs then increase the excise tax. Why? Because if you want to discourage excessive alcohol consumption you do it by taxing alcohol based on volume (as the excise tax does) rather than by dollar value (as the sales tax does). That’s why I’m voting yes on 1. But arriving at that conclusion was more complicated than I thought it would be.
Robert blogs about wine at The Wellesley Wine Press where he’s been helping consumers enjoy wine more while spending less money since 2008. He’s completed WSET Intermediate coursework and has trained as a mixologist. You can connect with him on Twitter: @RobertDwyer