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Sunday, December 30, 2007

Beer and Spirits Taxes

From today's Baltimore Sun:

If all the tax increases the [Maryland] General Assembly passed last month have you down, there might be at least one bright side: Drowning your sorrows is still cheaper in Maryland than just about anywhere else. <...>

Maryland's taxes on alcohol - which haven't increased since 1955 for liquor and 1972 for beer and wine - completely escaped the attention of the state's leaders last month, leaving the rates among the lowest in the nation and far less than the effective levies in neighboring states. <...>

In Maryland and D.C., the tax on spirits is $1.50 a gallon, the lowest rate in the country. West Virginia charges $1.70 and Delaware, $3.75. Pennsylvania and Virginia sell liquor directly through state-run stores, but the Distilled Spirits Council of the United States estimates they have effective tax rates of $6.54 a gallon in Pennsylvania and $14.54 a gallon in Virginia. Maryland's taxes on beer and wine are 10th- and 13th-lowest in the nation, respectively.

The rest of the article — Maryland drink stays cheap — addresses the topics of lobbying, campaign contributions, and the slippery-slope argument of individual responsibility.

Remember that beer, wine, and spirits are taxed first by federal excise tax, then by state excise tax, and finally, in most states, by sales tax. Some states further allow local jurisdictions to tack on additional excise or sales taxes.

The federal government offers small breweries a reduced excise tax differential — a rate of $7 on the first 60,000 barrels for any brewery that produces less than 2 million barrels. The 'big-boy' rate is otherwise $18 per barrel. There has been strong political pressure applied recently to increase the overall rate, and to remove the differential.

Selective comparison of State Beer Excise Tax Rates per gallon
Maryland $0.09
District of Columbia $0.09
Virginia $0.26
Georgia $0.48
North Carolina $0.53
South Carolina $0.77

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