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Alcohol tax increase is bad economic policy

Originally published in the Daily Times

Economic & Fiscal Policy

by Marc Kilmer

OP-EDS

It's an election year and in most states, politicians from both parties are running on platforms of reducing government spending and lowering taxes. Maryland is just a little different. The liberal Maryland Health Care for All Coalition is pushing a proposal to raise the tax on liquor by 853 percent, the tax on wine by 640 percent and the tax on beer by 1,188 percent. More than 130 Maryland legislative candidates have signed a pledge to support this tax hike -- bad news for overtaxed Maryland businesses and individuals.

This tax hike is earmarked to pay for expanding government health care services. In 2007, the General Assembly raised cigarette taxes to pay for this very same expansion. This tax increase did not produce enough revenue, though, so now advocates want to raise another set of taxes.

Under this plan, taxes would go up to $10.03 on a gallon of liquor, $2.96 on a gallon of wine and $1.16 on a gallon of beer. Do you really think this will be good for local businesses like restaurants, bars and stores already struggling in this recession? And what about this tax hike's effect on average Marylanders, who were burdened by the largest tax increase in Maryland's history in 2007?

Among the candidates running for House of Delegate or Senate seats representing Wicomico County, only a few took the tax hike pledge. What most of the Lower Shore's politicians seem to realize is that running on a platform of higher taxes isn't wise this year. It's not only bad politics, though, it's also bad policy.

Maryland should not raise taxes on alcohol to pay for new government programs. The state cannot afford the government programs it currently has -- it is already facing a $1.6 billion budget gap next year. Curtailing, not expanding, state government programs should be the first priority.

If funds are needed to pay for necessary government programs, there are many areas of the budget that could be trimmed to pay for them. For instance, should Maryland taxpayers really be footing the bill for state-owned golf courses or subsidizing Ravens Stadium and Camden Yards?

We don't need a higher tax on alcohol; Maryland simply needs better fiscal management. Imposing even more taxes on Maryland's economy is a sure way to destroy jobs not only in Wicomico County but across the state.

Marc Kilmer of Salisbury is a senior fellow at the Maryland Public Policy Institute, a public policy think tank based in Rockville, Md.