Despite Win in Delaware, State Tax Threats Remain
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.
Congress may be in recess, but legislators at the state level remain in session and focused on mining the hospitality industry for additional tax revenue. Three state tax battles concluded last week, including a successful defeat in Delaware:
Legislation to Increase the Excise Tax on Beverage Alcohol Defeated
On June 30, legislation to increase the excise tax on spirits, beer and wine, HB 212, died upon adjournment. Under the legislation, the excise tax on spirits would increase from $3.75 to $4.05/gallon, wine would increase from $0.97 to $1.72/gallon and beer would increase from $4.85 to $11.46/barrel. The Distilled Spirits Council worked with an industry coalition to oppose this legislation.
Sales Tax Increased and Applied to Beverage Alcohol Sales
On June 29, Gov. Deval Patrick signed the fiscal 2010 budget, which includes provisions to increase the sales tax rate from 5 percent to 6.25 percent and to remove the sales tax exemption on off-premise sales of spirits, beer and wine. The new tax rate will be effective on Aug. 1, 2009. The Distilled Spirits Council worked with an industry coalition to oppose the increase.
Increase to Spirits and Wine Excise Tax Enacted
On June 29, legislation to increase the excise tax on distilled spirits from $4.40 to $5.50/gallon and wine from $0.70 to $0.875/gallon, AB 4104, was signed by Gov. Jon Corzine and takes effect Aug. 1, 2009. The Distilled Spirits Council worked with an industry coalition to oppose the increase.
Significant state tax threats remain in Illinois and North Carolina. Please visit StopHospitalityTaxes.com and contact your state officials to oppose increased taxes on the hospitality industry:
Legislation to Increase Excise Tax on Beverage Alcohol Sent to Governor
On June 30, legislation to increase the spirits, wine and beer excise taxes, HB 255, was sent to Gov. Pat Quinn. Under this 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 already has 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! The Distilled Spirits Council is working with an industry coalition to oppose this legislation and seek a veto. Please contact Governor Quinn and ask him to use his veto power to eliminate the increases on beverage alcohol taxes.
Budget Includes Increase to the Excise Tax on Distilled Spirits
On June 15, the Senate failed to concur with the House budget that included increasing the excise tax on distilled spirits from 25 percent to 26.5 percent, SB 202. The legislature continues to debate the budget in conference committee. 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. The Distilled Spirits Council is working with an industry coalition to oppose increased beverage alcohol taxes. Please contact your North Carolina legislators and ask them to oppose increased taxes on beverage alcohol and the hospitality industry. — DISCUS