The financial news for Maryland keeps getting worse. The latest estimate of the budget deficit is $450 million. Next year, the figure is expected to exceed $1 billion.
A study by the Maryland Budget and Tax Policy Institute found that the state has one of the leanest governments in the nation. Still, the deficit means that the legislature will have to cut the budget and find greater efficiencies in the delivery of services. It also will need to find additional revenue to meet the state's constitutional requirement to balance the budget.
House Bill 87, which I am sponsoring, would help with additional revenue by doing what Maryland hasn't done in decades -- raise the state excise tax on alcoholic beverage products.
The last time Maryland increased the tax on hard liquor, gasoline cost 23 cents a gallon, per capita annual income was $2,047 and Dwight D. Eisenhower was in his first term as president. Maryland's population was half what it is now. The year was 1955.
The last time Maryland increased its tax on beer and wine, gas cost 36 cents, per capita income was $5,291 and President Richard Nixon was in his first term. Four million people lived in Maryland. The year was 1972.
Today, a gallon of gas is approaching $1.80, the per capita income is $35,188 and 5.5 million people call Maryland home.
During the past five months I have asked dozens of people what they think the state tax is on alcohol by the drink. Most guess between 25 and 50 cents. They are way off. The state tax on a shot of whiskey or a glass of wine is 2 cents. On a 12-ounce beer, it is 1 cent. In many Maryland package stores, a six-pack of cola costs more than a six-pack of beer.
No state has a lower tax on hard liquor than Maryland, and Maryland's beer and wine taxes are far below the national average. An ounce and a half of liquor, 6 ounces of wine and a 12-ounce beer have the same alcoholic content, but they are taxed unequally. My proposal would equalize the tax on all three units of alcohol at 6 cents. The state comptroller says this legislation would bring in $91.5 million in fiscal 2004.
The alcohol industry is quick to point out that Congress doubled the federal tax on beer in 1991, but it doesn't mention that the tax went from less than 3 cents to 5 cents on a glass of beer, with the tax on wine going up 2 cents a glass. It also doesn't mention that these modest increases were the first federal beer and wine tax increases in 40 years.
The alcohol industry makes the unlikely claim that the pennies-per-drink tax increase would throw hundreds of people out of work. It also ignores studies by the National Institutes of Health, the Centers for Disease Control and Prevention and other agencies showing that modest alcohol tax increases reduce underage drinking.
With or without slot machines, Maryland has a budget hole to fill if it is to keep its commitments to schools, public safety, health care, environmental protection and transportation.
An alcohol tax increase would make Maryland fiscally and physically healthier.
-- Bill Bronrott
a Democrat, represents Bethesda
in the Maryland House of Delegates.