Maryland's strong alcohol lobby likely to quash tax increase

By Aaron C. Davis
Washington Post Staff Writer
Friday, March 12, 2010

In recent years, Maryland has raised its sales tax, income tax, corporate tax and cigarette tax; added a surcharge called the "millionaires' tax"; and created taxes on electronic bingo, tip jars and even water and septic systems -- the "flush tax."

But lawmakers have not touched alcohol taxes. For 37 years, Maryland's levies on beer and wine have remained unchanged, and its pennies-per-drink charge on hard alcohol has not budged since 1955 -- a testament to the influence of the state's alcohol lobby.

This week, advocates for the poor and mentally ill have made hours-long pleas to powerful legislative committees in Annapolis, contending that raising alcohol taxes by a dime per serving would restore much-needed funding for health-care programs for the poor, services for the developmentally disabled, and drug and alcohol dependency programs hit hard by budget cuts.

The answer they'll get is the same as always: No.

"We're not going to consider taxes. That's the mantra this year. That's it," said Sheila E. Hixson (D-Montgomery), chairman of the House Ways and Means Committee, in an interview. She ruled out any increase in alcohol taxes.

In most states, so-called sin taxes are among the first to rise when lawmakers look for money to balance budgets. But in Maryland's General Assembly, which has been controlled by Democrats since long before the drinking age hit 21, the alcohol industry has remained impervious to nearly all changes it has opposed.

The industry's enormous success in Annapolis flows from a multi-pronged lobbying strategy that has been passed down for generations. Not only do industry leaders regularly stuff candidates' campaign accounts with cash, but they are also quick to mobilize a grass-roots network built into Maryland's heavily regulated three-tier system of wholesalers, distributors and retailers that grew out of the end of Prohibition.

In the decades since, liquor wholesalers, distributors, retailers and even county governments have carved out lucrative slices of Maryland's highly regulated booze business: No large chain stores are allowed; wholesalers can't be distributors, and vice versa; and in some counties, such as Montgomery, the local government operates its own stores.

In communities across the state, about 6,700 bar, tavern and liquor store owners, as well as union leaders for drivers and warehouse workers, sponsor little leagues and school events and are active in local chambers of commerce. When legislation starts circulating in Annapolis, lawmakers say, those people don't hesitate to call and tell them that a bill might increase competition, put small business owners out of work or send consumers across state lines.

The industry's network of political action committees, 120,000 employees, and powerful distributors and wholesalers have contributed more than $1.3 million to state lawmakers since 2000, according to campaign finance reports.

They have also spent nearly $900,000 in the past five years to maintain a stable of lobbyists and lawyers in Annapolis whose firms have represented the industry for more than three decades, according to state ethics reports.

General Assembly sessions are kicked off with a roughly $16,000-open-bar reception for lawmakers and their families, and the industry's wining and dining usually continues, such as with a $2,500 steak dinner Feb. 3 at Lewnes Steakhouse, an Annapolis institution.

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