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Maryland May Use Higher Alcohol Taxes as a Means to Satisfy Budget Needs

1 min readBy: Kailee Tkacz

Facing a $1.6 billion budget deficit, the Maryland Senate has approved a bill that will increase the sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. on all alcohol products gradually from 6% to 9% by 2014.

According to the Washington Examiner:

Once fully implanted, the 9% rate would generate roughly $85 million in additional revenue annually. Three quarters of this revenue generated in the first year would help fund education needs in Prince George’s County and Baltimore City…”

$21 million would go to the above school districts while another $5 million would go toward helping the developmentally disabled.

Balancing state budgets on the backs of a minority of taxpayers is poor policy. David Brunori of Tax Analyst puts it well:

Excise taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. es when used to raise general fund revenue are notoriously regressive….Using higher cigarette (or alcohol) taxes to fund education or public safety or raises for politicians is unfair and dishonest. If you care about the poor, fight the unprincipled use of excise taxAn excise tax is a tax imposed on a specific good or activity. Excise taxes are commonly levied on cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting, and typically make up a relatively small and volatile portion of state and local and, to a lesser extent, federal tax collections. es.

Government services should be important enough that people are willing (however grudgingly) to pay real broad based taxes. If people are not willing to pay real taxes (i.e., taxes on income, sales, and property) for government services, we should question the value of those services. We should shelter the poor and dispossessed from paying for this burden. But we should recognize that focusing solely on the rich will usually not work.