The Mass. Package Stores Association said the higher levy could cost more than 3,000 jobs, while bringing in roughly 30 percent less in revenues than the Patrick administration estimated.
Current alcohol taxes average $8.88 per case of beer. The new tax would add an additional 6.25% tax at the retail level. As a retail tax, this tax would also tax the existing hidden taxes.
We currently have a 5 cent per bottle deposit. The governor has also proposed raising that to 10 cents per bottle. New Hampshire has no deposit.
When people on the left often estimate the additional tax revenue from raising taxes they use a static model. Multiply the total alcohol sales by 6.25% and you get the estimate. In reality they need to use a dynamic model. With higher taxes on sales there are higher costs of sales. Some people will reduce consumption. More people will seek alternatives. Here, that means buying alcohol from out of state. Both factors result in decreased Massachusetts sales which are not taken into account in a static model.
With Massachusetts stores doing less business revenues, the government will see reduction in tax receipts from existing taxes. Receipts on alcohol/excise taxes from sales will go down. Personal income taxes from lost jobs will go down. Corporate tax receipts will go down from less business revenues. Along the border, some business may even close.
Spending will also go up because of higher taxes. Some oversight and enforcement to implement these new taxes will be needed. The unemployed will result in higher costs from MassHealth and other areas.
Why are the Dems doing this? Because they refuse to control spending.
MORE BELOW THE FOLD….
According to The Tax Foundation Massachusetts taxes are already much higher on alcohol, cigarettes and general sales than New Hampshire and other states before these new taxes would go into effect. Our tax on beer is currently lower if you exclude the deposit. I found it interesting that our taxes here are measured “per gallon.” Because of this, a $100 bottle of wine has the same tax as a $6 bottle of wine. Such taxation is regressive. You would think liberals would be opposed to this type of taxation. I guess not. These numbers are as of 01/01/09.
- Sales Tax MA: 5%, NH 0%
- Gas Tax MA: $.235/gallon, NH: $.196/gallon
- Cigarette Tax MA:$2.51/pack, NH: $1.53/pack
- Spirits Tax MA: $4.05/gallon, NH: *Less than zero.
- Wine Tax MA: $0.55/gallon, NH: 0.
- Beer Tax: MA: $0.11/gallon, NH: $0.30/gallon
- Deposit: MA; $.05/can or bottle, NH: 0
New Hampshire has state run liquor operations which complicates this particular situation. Still, this link provides useful statistical information for all 50 states. I added the “Deposit line” which is not included in the link.