Maryland’s House of Delegates on Saturday was angling to pass a targeted tax increase on alcohol for the first time in 38 years.
The House plan would collapse a three-year phase-in of the state sales tax on alcohol passed by the Senate into one year. Starting July 1, Maryland’s sales tax on beer, wine and spirits would jump from 6 percent to 9 percent, yielding about $85 million a year in new revenue.
Debate on the measure, which was approved by the Ways and Means Committee earlier Saturday, continued on the House floor past 10 p.m.
The measure still faces a final vote in the House and other hurdles before the General Assembly adjourns on Monday. The Senate has passed a measure that would raise the tax by 3 percentage points over three years.
The late-session move brought howls of protest from Republicans in the Democrat-led chamber. House Minority Leader Anthony J. O’Donnell (R-Calvert) accused the chamber of trying to “jam a tax down the throats of the citizens of Maryland.”
The higher rate would represent a partial victory for public health advocates and the Maryland Developmental Disabilities Coalition, which have lobbied for two years for a 10-cent per-drink tax increase to restore recessionary funding cuts made to social services.
“It makes a great public health victory even greater,” said Vincent DeMarco, president of the Maryland’s Citizens’ Health Initiative, who has been a vocal supporter. “It will reduce incidents of alcohol abuse.”
But the measure’s progress this year has been due in no small part due to a carve-out lawmakers made to use a portion of the new revenue to aid schools.
About $21 million in the House plan would be earmarked for school operating costs next year in Prince George’s County and Baltimore.
The House plan would also steer additional money to school construction across the state next year. Montgomery County and Prince George’s would both get an additional $9 million.
The proposed tax-increase gained momentum after lawmakers realized the District had a little-known sales tax specific to alcoholic drinks.
Maryland’s alcohol lobby has long held that the state should not increase its alcohol excise tax above that in the District. But early this year, state analysts reported the sales tax approach would put Maryland on par with the District, which charges 9 percent at retail stores and 10 percent on liquor consumed in bars and restaurants.
That data gave lawmakers cover to go against the entrenched alcohol lobby. Maryland last raised its excise tax on beer and wine 38 years ago, and its levy on hard alcohol in 1955. The state’s general sales tax, which applies to alcoholic beverages, was last raised from 5 percent to 6 percent in 2007.