Proposed Increases in State and Local Taxes and Fees, 2005



Legislative efforts to raise alcohol taxes at the state level have been accelerating all over the country.  Although they have generally been unsuccessful, the sheer number of active legislative initiatives suggests that the alcohol-tax issue has plenty of life and growing support.  Some of the prominent state battles are highlighted below.


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House Bill 6684 would have raised all alcohol taxes by 15 percent.  On April 21, the Joint Finance, Revenue, and Bonding Committee passed a tax bill (S.B.1321) that incorporated elements of H.B.6684, but did not include the alcohol tax increases. 


House Bill 1120 made it through the House and received the endorsement of the Senate Tax and Fiscal Policy Committee before having the alcohol tax increase provisions eliminated by the full Senate.  The bill moved to Conference Committee, where it passed without alcohol tax increases.  Had the bill passed, the excise tax on beer would have doubled, increasing from 12 to 23 cents/gal; the wine tax would have increased by 25 percent, from 47 to 59 cents/gal; and the liquor tax would have risen by 29 percent, from $2.68/gal to $3.35/gal.




On March 18, Gov. Ernie Fletcher signed H.B.272 into law.   This tax overhaul bill raises all alcohol sales taxes -- beer, liquor, and wine -- from nine to eleven percent.   The tax is levied on wholesalers, and revenue from the tax is being used to cut personal income taxes.


Gov. Kathleen Blanco had proposed increasing alcohol taxes as one means of funding pay raises for the state’s poorly paid teachers.   The governor proposed raising taxes on tobacco, alcohol, and gambling, netting some $120 million in new revenue for the state. 


Two alcohol tax increase bills went down to defeat early in the session.  Later, on April 21, Sen. Jane Ranum, who heads the Senate Public Safety Budget Division, introduced a public safety spending bill that would have increased the excise tax on beer, wine, and liquor by one penny per drink.  The tax proposal failed to survive in the Senate Taxes Committee and was removed from the bill on April 28.


House Bill 184 would have created the “Fund for the Reduction of Alcohol-Related Problems and Underage Drinking.”  The bill would increase the beer tax from 6 to 24 cents/gal; liquor from $2 to $4/gal; and wine from 42 to 78 cents/gal.  All new revenue from those taxes would be dedicated -- half to prevention and the other half to treatment and law enforcement.  Impressively, the bill would have indexed the tax rates to future inflation.

North Dakota:

Senate Bill 2372 created a “Responsible Choices Commission,” focusing on alcohol prevention and treatment.  The original proposal included a provision to fund this commission with a beer tax increase, from 16 to 25 cents/gal.  The tax increase was later stripped from the bill, which will require the commission to raise its own funds. 


House Bill 66 would have doubled the beer tax, from 18 to 36 cents/gal, and the wine tax, from 30 to 60 cents/gal.  The House approved it the second week of April, but on May 24th, the Senate Finance Committee removed the alcohol tax increases from the bill. 




Senate Bill 1049 would have given counties the right to add a fee of 10 cents to every can of beer sold in their county.  The fee would have been collected by the State of Oregon and placed in a new Malt Beverage Cost Recovery Fee Fund, and then returned to the counties that originally imposed the fee.  Impressively, the fee would have been indexed to inflation.  Revenue from the fee would explicitly fund alcohol prevention, enforcement, and treatment programs.

South Dakota:

Senate Bill 127 would have raised the distilled spirits excise tax from $3.93/gal to $15.36/gal; the wine excise tax from 93 cents/gal to $4.39/gal; and the beer excise tax from 27 cents/gal to $1.28/gal.  All proceeds would have gone to the law enforcement and domestic violence funds.


Pennington County is collecting signatures for a 2006 ballot initiative to add a 1 percent tax on the retail sale of all alcohol.  The tax would provide funds for county law enforcement agencies, which do not receive any revenue from the state's alcohol taxes.


On May 3, the Senate Finance Committee recommended raising all alcohol taxes by 25 percent.  The Legislature is facing a court order to change the way it funds its public education system, which currently relies on property taxes.  House Bill 3 included an amendment, which was later removed, that would have raised alcohol taxes.


House Bill 2314, which was signed by the governor on May 17, raises the state liquor tax from $2.44/liter to $3.77/liter.  The state operating budget also renews the 42 cents/liter liquor mark-up that was imposed two years ago.  Both tax increases took effect July 1.


In the state of beer and brats, Rep. Therese Berceau introduced a bill that would increase the beer tax by 50 percent, from $2 to $3 per 31-gallon barrel.  The tax would raise $4.7 million a year specifically to pay for alcohol-abuse treatment.  Although Wisconsin has the second-lowest beer tax rate in the nation (after Wyoming), Berceau has encountered major resistance to her bill, which would raise the price of a six-pack by two cents.  The bill is currently in the Assembly Committee on State Affairs.


F or more information on alcohol taxes, or to alert us of other tax initiatives,  please send us an email.


Updated November 3, 2005

Related Links:

2003 Alcohol Tax Proposals

2004 Alcohol Tax Proposals

State Alcohol Tax Increases, 2002-2005


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