MA State Representative Proposes Legislation to Reinstate Tax on Alcohol

Sunday, January 30, 2011

Just when you thought the Massachusetts alcohol sales tax issue was resolved...

Massachusetts State Representative Kay Khan (D-Newton) has introduced legislation which would not only reinstate the sales tax on alcoholic beverages sold at retail - it would also increase the excise tax.

Here's a story from Kyle Cheney, State House News Services

And commentary from Garrett Quinn on Boston.com

Kahn's saying a discussion about reinstating the tax is "what people want to hear" is ironic since a majority of voters said they didn't want sales tax on alcohol just two months ago.

What's new here is how the increases are positioned.  Previously the sales tax on alcohol was said to be earmarked for behavioral health services.  In this proposal it's a classic sin tax increase aimed at increasing state revenue.

I have a couple of ideas for things the state legislature could do in the interest of their constituents instead:

  1. Take up the issue of direct shipment of wine that was proposed in the last sessions as H4497.  It's pro-consumer legislation that enables shipments that a federal court decided should be legal in January 2010.  It's January 2011 now and shipments still aren't occurring - a total disconnect between the intent of the law and what is occurring in practice.
  2. Propose legislation to allow Massachusetts retailers to ship out of state.  Currently, Massachusetts is the only state in the union I'm aware of that prohibits export of wine.  If state retailers were allowed to ship wine out of state, it would increase the amount of wine flowing through the state's 3-tier system and more excise tax would be collected as wine trades hands between Massachusetts distributors and retailers.  It would also enable state retailers to drive a higher volume of wine which could lead to more jobs in wine e-commerce in the state.
I'm fine with an examination of whether the excise tax rates need to be increased.  I suggested an excise tax increase when the question of whether to repeal the sales tax was being debated.

But the notion of disregarding the results of the Question 1 in November of 2010 which specifically asked the question of whether alcohol should be exempt from sales tax sold at retail is insulting.  Let's keep that off the table in newly proposed legislation.

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