States Eye Alcohol Taxes And Regulations For New Revenue

State and local governments are turning to alcohol taxes and regulations as a source of new revenue.
by | September 29, 2011

There is a lot of buzz surrounding taxes on alcohol, as states look for new revenue streams as others continue to falter, the New York Times reports. Since the recession began in 2008, 12 states and dozens of cities have raised taxes on drinks or altered their regulations to increase revenue.

In Maryland, for example, the sales tax on alcohol shot up to 9 percent from 6 percent this July. That increase is expected to reap another $85 million in revenue, according to the Times. Illinois upped its alcohol tax in 2009 and has seen an additional $100 million enter the state's coffers annually.

The newspaper reports some of the remaining states that prohibit alcohol sales on Sundays are now considering changing their policies. Voters in Atlanta and other cities in Georgia will decide this November whether or not to allow the practice. One analysis estimates Sunday sales could generate nearly $5 million in new revenue.

State and local governments earn about $17 million annually from alcohol taxes, according to the Times, a number that has been steadily rising for years but slowed slightly by the recession.

"These are kind of antitax times, so it's tough to raise any kind of tax, but this is one they might have more success with," Mark Stehr, an associate professor of economics at Drexel University in Philadelphia who has studied the effects of taxes and regulations on cigarettes and alcohol sales, told the Times.

Others, though, told the newspaper lawmakers were pursuing an easy revenue stream without considering the consequences.

"Lawmakers are taking a very short-sided view," David Jernigan, director of the Center of Alcohol Marketing and Youth at the Johns Hopkins Bloomberg School of Public Health, told the Times. "What they gain in short-term tax revenue they are losing in long-term police costs, emergency room costs and work-force readiness costs in terms of the Monday morning effect."


More from Finance