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Massachusetts Voters to Decide Whether to Repeal Alcohol Tax

Wednesday, July 14, 2010

Photo by philip

I read today on the Massachusetts Alcoholic Beverages Licensing Blog that those in favor of repealing the Massachusetts sales tax on alcohol were successful in getting their initiative on this November's ballot.  This is potentially good news for those who buy wine in the state, but get ready for the political maneuvering to begin.

It was just over a year ago that Governor Patrick signed into law the increase from 0% at the point of sale to 6.25%. Already subject to excise taxes, alcohol is now double-taxed much to the delight of state revenue collectors and much to the chagrin of wine enthusiasts and wine retailers (especially those near New Hampshire where there is no tax on wine at the point of sale).

I'm in favor of repealing the tax on alcohol at the point of sale.  Here's why:

Once in place, sin taxes have a way of escalating irrationally any time more tax revenue is needed.  The right thing to do is determine what an appropriate tax level is for alcohol and stick to it.  Has the appropriate taxation level for alcohol changed suddenly?  Or has the state's need for tax revenue changed suddenly due to the economy?  I would argue it's the latter.

If the logic is that funds are needed for state-sponsored rehab programs then increase the excise tax.  Why?  Because if you want to discourage excessive alcohol consumption you do it by taxing alcohol based on the volume (as the excise tax does) not by dollar value (as the sales tax does).  Anything else is just an arbitrary unbalanced way to squeeze more tax revenue out of Massachusetts residents who purchase alcohol.

Question of the Day: What do you think of the alcohol tax?

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