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Busy Summer Ahead on Tax Front – Get Involved

July 1, 2009 By: Nightclub & Bar


Editor’s Note:  We are pleased to now bring you breaking news and updates on federal and state tax threats, as well as other legislative and regulatory issues affecting nightclubs, bars and restaurants, from the Distilled Spirits Council of the U.S. in NCB First Round. Look for regular DISCUS UPDATE sections, and get involved by visiting the web sites indicated and communicating with your representatives.

FEDERAL UPDATE

In response to the President’s request to produce legislation by summer’s end, Congress is working fervently on a major health care plan that will lower medical costs and expand coverage for more Americans. At this point, formal legislation has not been introduced.  However, legislators who sit on the powerful tax-writing committees have stated they intend to release a formal proposal in early July.  New revenue will be needed to finance the costs associated with this new plan.  Advocacy groups are pressing hard to raise beverage alcohol taxes.  One proposal under consideration could jeopardize $9 billion in retail sales: $5.5 billion for on-premise operators and $3.5 billion for off premise retailers.  Over 160,000 jobs would be lost if the proposal were to be enacted.        

Members of Congress have scheduled a district work period THIS WEEK (Monday, June 29th through Sunday, July 5th).  This creates a perfect opportunity to invite legislators to visit your facility and grasp an understanding of your business and its economic impact on the local community.  Please consider raising the following points:

  1. Simply put, an alcohol tax is nothing more than a hospitality tax!  The hospitality and leisure sector cannot withstand additional taxes.  Since May 2008, unemployment now stands at 11 percent and more than 525,000 jobs have been lost.
  2. The nations’ hospitality industry derives a substantial portion of its jobs and sales from beverage alcohol.  Restaurants that sell spirits, beer and wine earn on average more than 25 percent of their income from alcohol sales.
  3. Beverage alcohol is among the highest taxed consumer product in the U.S.  Direct taxes on beverage alcohol account for more than one-third of the shelf price of distilled spirits, beer and wine.  Government at all levels collects twice as much in taxes than those who produce, distribute and sell combined make in profits.
  4. Hospitality taxes penalize responsible, middle income consumers.  The federal excise tax on beverage alcohol is one of the most regressive taxes imposed on any American product.  Half of beverage alcohol is consumed in households with less than $50,000 in annual income.        

Please make every effort to speak or meet directly with your elected Representatives during the district work period.  They need to hear from home state interests and understand how an increase in beverage alcohol taxes impacts the hospitality and leisure sector.  For more information on how to contact your legislator, go to http://www.StopHospitalityTaxes.com.


STATE UPDATE

North Carolina

Legislature Considers Distilled Spirits Tax Increase

The North Carolina legislature remains in conference committee to come to an agreement on the state budget. The Senate has rejected the House version of the budget, which contained increases to the excise tax on distilled spirits, but the threat of a tax increase on distilled spirits still remains very high. North Carolina consumers already pay eight different direct taxes on spirits products. As a result, more than 60 percent of the purchase price for a bottle of spirits in North Carolina already goes toward taxes! A tax increase will harm North Carolina’s hospitality industry, which has already lost 11,000 jobs in the past year due to the recession. North Carolina residents can contact their legislators through http://www.StopHospitalityTaxes.com to urge them to keep taxes on the hospitality industry out of the state budget.


New Jersey

Legislature Passes Wine and Spirits Tax Increase

On June 25, the New Jersey legislature passed legislation (AB 4104) to increase taxes on distilled spirits and wine as a part of the state budget. The legislation increases the excise tax on spirits from $4.40 to $5.50/gallon and wine from $0.70 to $0.875/gallon, effective August 1, 2009. The Distilled Spirits Council worked with an industry coalition to oppose the increases.


Illinois

Legislature Passed Tax Increase on Beverage Alcohol

The House continues to hold the capital bill (HB 255) containing enormous increases to beverage alcohol taxes. Under the legislation, the spirits excise tax would increase from $4.50 to $8.55/gallon, wine from $0.73 to $1.39/gallon, and beer from $0.19 to $0.23/gallon. The recession has already put a severe strain on the hospitality sector in Illinois and if the Governor signs these increases into law, an estimated 4,500 jobs would be lost. Furthermore, Illinois excise taxes are already extremely high – higher than any other neighboring license state. With county and city taxes considered, Chicago has one of the highest tax rates on distilled spirits of any major U.S. city. If Governor Quinn signs HB 255, the Chicago spirits tax rate will be 77 percent higher than New York City. As a contender to be the 2016 Olympic host, Chicago and Illinois should be building and supporting its hospitality industry, not inflicting more damage. Illinois residents can contact Governor Quinn through www.StopHospitaltyTaxes.com and ask him to veto the increases to beverage alcohol taxes. -- DISCUS


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