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Another round for state booze tax?
Lawmaker says time is right for raising rates on alcoholic beverages

Steve Terrell | The New Mexican
Posted: Tuesday, November 03, 2009
- 11/4/09
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When lawmakers return to Santa Fe in January to consider ways to cover the state's budget deficit, one likely target is raising taxes on alcoholic beverages.

During the recent special session, two lawmakers — Rep. Brian Egolf, D-Santa Fe, and Sen. Bernadette Sanchez, D-Albquerque — introduced bills that would have raised the state's excise tax on beer, wine and distilled spirits. Neither bill received serious debate because of Gov. Bill Richardson's proclamation precluding tax-increase legislation during the short special session.

But with all financial bills fair game in the regular 30-day session — and the budget crisis continuing — Egolf said Tuesday that he'll introduce his "dime-a-drink" tax hike again next year, along with legislation to raise cigarette taxes and motor-vehicle registration fees.

The last time legislators seriously considered raising taxes on alcohol, during a special session in 2003, the liquor industry fought hard — and won. At the end of that session, Richardson, who had supported a liquor tax hike, declared, "If the liquor industry thinks they've beaten Bill Richardson, they're wrong." But Richardson never raised the issue again.

Egolf believes the idea's time has come. He points to a poll — commissioned last month by the New Mexico Education Partners, which includes teachers unions and other professional educator organizations — that shows 70 percent of the 400 registered voters surveyed supported increasing taxes on tobacco and alcohol products to increase revenues for public schools. In that poll, which has a margin of error of 4.9 percent, only 27 percent opposed the idea of increasing what are sometimes referred to as "sin taxes."

Egolf said his bill would raise the rates on the various types of alcoholic beverages by an amount that would boost the price of a single serving by about 10 cents. This, he said, would generate between $43 million and $50 million in new revenue for the state.

But the liquor industry argues that such an increase would hurt business.

"In a recession, it's a bad idea to raise any tax," longtime liquor lobbyist Ed Mahr told a reporter Tuesday. "Things are tough out there for businesses. The excise taxes here are too big already."

Mahr pointed out that New Mexico has some of the highest excise taxes in the country.

Both the excise tax on beer (41 cents per gallon) and wine ($1.70 per gallon for most wines) are among the top 10 highest such state taxes, according to a study published this year by The Tax Foundation, a Washington, D.C.-based nonpartisan tax-research group. The state excise tax on distilled spirits ($6.06 per gallon) is the 17th highest such levy in the nation.

In 2003, when the Legislature was considering a tax increase on alcohol, a national liquor industry group called the Distilled Spirits Council of the United States launched a campaign of radio ads saying the proposed tax increase would seriously hurt New Mexico hotels and restaurants and the people who work there. The group still maintains this would be the case.

Council spokesman Ben Jenkins, in a phone interview Tuesday, called the alcoholic beverage excise tax "the hospitality tax."

"Any increase is going to have an effect on your hospitality industry and your tourism industry," Jenkins said. He pointed out that the industry has suffered in the state. According to the latest report from the state Department of Workforce Solutions, the hospitality and leisure industry lost 1,300 jobs between September 2008 and September 2009.

But Egolf disputed the contention that his tax increase would hurt the hospitality industry. "That's crazy," he said. "If you are going out with your friends to have three or four beers — with a designated driver, of course — you're not going to stay home just because it's going to cost you an extra 40 cents."

Jenkins said he didn't know whether his organization would run radio ads in New Mexico next year to fight a tax increase.

But one thing bound to continue is the liquor industry giving campaign contributions to legislators and other state officials.

Last year, according to the National Institute on Money in State Government, the alcoholic beverage industry dropped $109,926 on state politicians. Of that, more than $39,000 went to state Senate candidates, while more than $42,000 went to House candidates.

In the last gubernatorial race in 2006, liquor manufacturers and distributors contributed $57,425 to Richardson and $14,378 to Lt. Gov. Diane Denish. J.R. Damron, a Republican gubernatorial candidate, received $500.

Richardson's rhetoric against the liquor industry might have cost him though. In 2002, when he first ran for governor, he had received more than $152,000 from liquor interests.

Contact Steve Terrell at 986-3037 or sterrell@sfnewmexican.com. Read his political blog at roundhouseroundup.com.


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Comments (17)
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Rick Salazar   (posted on 11/4/2009)
Wow, 10 cents a drink is going to kill the industry. Geez, the "sin" taxes need to be increased. I would rather those go up than the gross receipts or income tax. Those are necessities. Liquor and tobacco aren't. If you don't want to pay the extra tax, don't drink or smoke. Or cut back. These are luxuries.
Ambro A   (posted on 11/4/2009)
Oh Bill in SF, you know darn well, when in doubt, they always go after sin taxes. It`ll only scratch the surface of their big need. Kinda like feeding a junkie.
Bill In Santa Flush   (posted on 11/4/2009)
You mean I work hard all week to pay my taxes, payroll, etc, and got pay more for my little celebration on friday night for making it thru another crappy week. Go to hell $bill!
P Orlando Baca   (posted on 11/4/2009)
Maby Fat Bill and the Legislature should consider INCREASING spending yet again! It has sure worked well in the past. Look at the prediction we are in now. Don't ever even consider CUTTING spending. Keep doing what you have always done. IT IS TIME TO THROW ALL OF THESE BUMS OUT!
Jim Green   (posted on 11/4/2009)
Ahh, remember the days of the "permanent" "rainy-day fund"??
Ambro A   (posted on 11/4/2009)
Darn it! Taxing liqueur is a regressive tax. I get all regressive when I drink it.
Raul Fierro   (posted on 11/4/2009)
What a shame. Yet another example of the cost of Big Bill's spending spree and the legislature's refusal to stop him in time. Drinks and dinner are already expensive enough. Why do we have to pay extra taxes for his poor choices? Yes Governor, it's painful. This style of governance cost Corzine his job in NJ. Lady Di better be paying attention.
Ryan Flahive   (posted on 11/4/2009)
When will governments learn that Sin Taxes are not reliable sources of revenue? If the taxes to divert folks from purchasing liquor and tobacco (which is why they are created) were to actually work, people would stop or slow down on those activities. Just ask our southwestern neighbor to the west, Arizona, how Sin Taxes have negatively affected their budget. They are in a worse quagmire than NM because they instituted these type of Sin Taxes, expected revenue, and created a deficit. If we are to raise taxes on these products, don't build the revenue into the budget. Reduce the size of government in order to cut the budget. Its the only sensible answer!
Rex Pierson   (posted on 11/4/2009)
The way folks drink in New Mexico, the deficit should be paid off in a week, two tops.
Don Walk   (posted on 11/4/2009)
As one of the Icons of the "Tax & Spend" party so eloquently stated this past week: "Tax everything that moves, breaths or stands still." Never, but never stop spending - not as long as one citizen still has money in their pocket. Tax, tax, and tax some more. It is their money and they want it, now! Increased taxes have never stopped anyone from drinking that wants to, it only authorizes career politicians to spend more money on wasteful pork and projects. THE STATE OF NEW MEXICO HAS A DEFICIT IN EXCESS OF ONE BILLION DOLLARS IN THE LAST TWO YEARS - SHOULDN'T THAT BE ENOUGH TO THROW ANYONE OUT OF OFFICE? Stop spending, stop spending, stop spending.
Bill In Santa Flush   (posted on 11/4/2009)
Solution for debt. Take the $450 mil and split it between all the registered democrats for a one time payment. Bingo don't have to raise taxes and the $bill debt is repaid.
Dennis Bachlet   (posted on 11/4/2009)
The Liquor Lobby has controled our Legislature for long enough. Tax liquor "to the hilt" and throw these self-serving fools out of the State House.
Dr Eisenbart   (posted on 11/4/2009)
says no to liquor tax increase!
Jason Trujillo   (posted on 11/4/2009)
How about we stop the piggish spending? Richardson has too many people that serve at his pleasure! Let's take an axe to those jobs! Let's reduce the travel state employees take to only what's essential. This isn't about booze. It's about taxing people who work too damn hard for their money just so government administrations like Richardson's can have a nice jet with a wet bar. This is a joke. We need to oust every legislator that pushes a tax hike. See the election results in NJ and VA? I hope that happens here.
A. Gidner   (posted on 11/4/2009)
Prohibition? Really? Seems like that was tried a while back. Sometimes the "cure" is even worse than the disease. Until we stop relying on band-aid solutions that only treat the symptoms, not the disease, nothing is going to change.
Drive By Poster   (posted on 11/3/2009)
a liquor tax? THAT IS TAXING DEATH. is our state and our residents TOO FRIGHTENED to ABOLISH LIQUOR????? ***EVERY*** story you read about murder.. stabbings.. hit and run... they ALL have only ONE COMMON DENOMINATOR... and that is **ALCOHOL**. but the new mexican public want to have their booze... it's amazing that they come out with all their torches when someone drinks too much of THEIR BOOZE and kills someone. santa fe is a bunch of lame a** hypocrites.
Drive By Poster   (posted on 11/3/2009)
a liquor tax? THAT IS TAXING DEATH. is our state and our residents TOO FRIGHTENED to ABOLISH LIQUOR????? ***EVERY*** story you read about murder.. stabbings.. hit and run... they ALL have only ONE COMMON DENOMINATOR... and that is **ALCOHOL**. but the new mexican public want to have their booze... it's amazing that they come out with all their torches when someone drinks too much of THEIR BOOZE and kills someone. this world is a bunch of lame a** hypocrites


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