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

April 4, 2011

Facing a $1.6 billion budget deficit, the Maryland Senate has approved a bill that will increase the sales tax 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 taxes 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 taxes.

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.

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