State & Federal Tax Threats
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.
In this economy, the hospitality industry can’t afford to lose any more jobs to punitive tax increases. Currently, when you buy a typical bottle of spirits, 59 percent of the purchase price goes toward taxes and fees! Similarly, about 33 percent of the price of a typical bottle of wine and 41 percent of the price of a glass of beer go toward taxes and fees at the federal, state and local level. Policymakers need to understand that a tax on alcohol is a tax on the entire hospitality industry that negatively affects restaurants, hotels, bars, nightclubs and liquor stores and the thousands of men and women they employ.
Yet, despite being one of America's highest taxed consumer products, federal, state and local governments still are attempting to further inflate the hospitality tab by increasing alcohol taxes even more. In 2009, 40 states have considered legislation to increase beverage alcohol taxes — including the following threats that are being considered right now:
- Congress is exploring options to pay for reforms in health care policy. A number of advocacy groups have proposed to raise revenues from an increase on the federal excise tax on beverage alcohol. Under the current proposal, on-premise sales would decline by $5.5 billion, and off-premise sales would fall by $3.5 billion.
- In North Carolina, legislators are considering increasing the excise tax on distilled spirits as a part of the state budget. This increase would raise prices for consumers, decrease retail sales for businesses and add to the 11,000 jobs lost in the North Carolina hospitality industry in the last year.
- In Delaware, the legislature is considering increases to the excise taxes on distilled spirits, beer and wine. The proposal to increase spirits, beer and wine excise tax rates would cause Delaware retailers to lose an estimated $12 million in retail sales and a loss of 200 jobs across the state in the struggling hospitality industry that has already lost 1,500 jobs in the last year.
Alcohol is an important component of the American economy and is the cornerstone of the hospitality industry. In addition to 4 million U.S. jobs, the beverage alcohol industry is responsible for more than $80 billion in annual U.S. wages and more than $425 billion annually in U.S. economic activity.
When the state hospitality industry is already struggling, this is the wrong time, this is the wrong tax and these are the wrong people to punish.
It's time to tell our elected officials,”No more hospitality taxes!” To contact your legislators or for more information on other current tax threats, please visit www.StopHospitalityTaxes.com. – DISCUS
More on State Tax Hot Spots from DISCUS
Legislation to Increase the Excise Tax on Beverage Alcohol
On June 18, legislation to increase the excise tax on spirits, beer and wine, HB 212, was heard in the Delaware House and fell one vote short of passage. It is expected to be on the floor again this week. Under the legislation, the excise tax on spirits would increase from $3.75 to $4.50/gallon, wine from $0.97 to $1.72/gallon and beer from $4.85 to $11.46/barrel. The proposal to increase spirits, beer and wine excise tax rates would cause Delaware retailers to lose an estimated $12 million in retail sales and 200 jobs across the state in a struggling hospitality industry that has already lost 1,500 jobs in the last year. The Distilled Spirits Council is working with an industry coalition to oppose this legislation.
Budget Includes Increase to the Excise Tax on Distilled Spirits
On June 13, North Carolina legislation to increase the excise tax on distilled spirits from 25 percent to 26.5 percent as a part of the state budget, SB 202, was passed by the House. The Distilled Spirits Council worked with an industry coalition to oppose this legislation. 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. This tax increase will harm North Carolina’s hospitality industry, which has already lost 11,000 jobs in the past year due to the recession.
Legislation to Increase Excise Tax on Beverage Alcohol Goes to Governor
On May 21, legislation to increase the spirits, wine and beer excise taxes, HB 255, passed the legislature and was transmitted to the governor. 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 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’s! As a contender to be the 2016 Olympic host, Chicago and Illinois should be building and supporting its hospitality industry, not inflicting more damage. Any further increase in these taxes will directly impact jobs in the hospitality industry. The Distilled Spirits Council is working with an industry coalition to oppose this legislation and seek Governor Quinn’s veto of the alcohol taxes.
Legislature’s Budget Includes Increase in Spirits and Wine Excise Tax
On June 15, the New Jersey Senate Budget and Appropriations and Assembly Budget Committee passed a budget, SB 2013/AB 4104, which includes increasing the excise tax on distilled spirits from $4.40 to $5.50/gallon and wine from $0.70 to $0.875/gallon. The full Senate and Assembly will consider the bills. As a result, the proposal to increase spirits and wine excise tax rates by 25 percent would cause New Jersey retailers to lose an estimated $60 million in retail sales and a loss of 1,000 jobs across the state. The Distilled Spirits Council is working with an industry coalition to oppose the increase.