Articles Posted in Taxes

The Boston Globe reports that two Boston city councilors have filed paperwork to begin a process that could result in a substantial new citywide tax on the sale of alcohol, and to use the millions of dollars in expected revenue exclusively on substance abuse prevention and treatment programs.

The proposal, if passed by both the City Council and the state Legislature, would impose a tax of 1 percent to 2 percent on all alcohol sales, including beer and wine, in city restaurants, taverns, bars, supermarkets, and package stores.

City Council President Bill Linehan, who offered the proposal along with City Councilor Frank Baker, said that thousands of people are afflicted by alcohol and drug addiction, many of them unemployed and a burden on the public. Helping them sober up and become productive citizens represents a huge opportunity to save public money, he said.

Connecticut residents have a new reason to cross state lines in to Massachusetts. First it was cheaper gas, now it is cheaper liquor —- Connecticut has raised its liquor tax by 20% effective July 1.

Employees at liquor stores like Phipps in Feeding Hills, Mass, which is near the state line, say that they have seen an increase in business.

“I don’t go into Connecticut and buy it,” Jamie Nielson of Suffield, Connecticut said. “It’s literally not even a mile from my house so it’s so worth it coming here.”

Foxboro has become the latest community to add a 0.75 percent local option meals tax on top of the state’s 6.25 percent tax.

After about 90 minutes of debate this week, annual town meeting voted 318 in favor of the tax, 221 opposed.

The tax will add 75 cents to a $100 tab for food and alcohol at a restaurant or bar. The additional tax will also apply to food and beverage sales at Gillette Stadium.

Some area restaurant owners say legislation supported by 20 state senators and representatives that would eliminate the state’s 6.25 percent meals tax on food and alcohol for a week in March would give local restaurants much-needed attention, reports the Worcester Telegram.

Multiple snowstorms have kept people stuck inside, and the proposed meals tax holiday March 20 through March 26 would bring consumers back out to eat, one restaurant owner said. The tax holiday would not apply to the .75 percent meals tax that towns and cities are permitted to charge.

Paul Barber, owner of the Flying Rhino Café & Watering Hole on Shrewsbury Street in Worcester, said the holiday “would definitely help shake the poor habits … the routine of not going out.” He said it would bring “awareness to part of the economy that has been struggling through the winter.”

In a close vote, Massachusetts voters decided Tuesday to repeal the 6.25 percent tax on alcohol and restore the sales tax exemption liquor enjoyed until last year. Package store owners near the New Hampshire border argued that the tax had resulted in the loss of business to the tax-free Granite State.

Many in the liquor industry, which raised more than $2.5 million for the repeal effort, also noted that alcohol was already subject to an excise tax.

“The voters supported Question One because it’s unfair to double tax one product and because it was putting too many local businesses at a competitive disadvantage,” said P.J. Foster, a spokeswoman for the Yes on One Committee, in a statement.

I tend to agree with the Boston Globe editorial pages and columnist Derrick Jackson — a “NO” vote on Question One in Nov. 2 is prudent, thereby keeping the 6.25 tax on alcoholic beverages.

According to the state Department of Revenue, the tax raised $97 million in fiscal year 2010. It is projected to rise to $110 million in fiscal year 2011. Already, in the first quarter of the new fiscal 2011, the sales tax brought in $33.2 million, $4 million more than what was projected. The numbers further suggest that sales of alcohol at liquor stores have not substantially declined.

As Jackson notes, the sales tax on liquor has notable benefits. It is dedicated to state substance abuse programs. Michael Botticelli, state director of substance abuse services, says the taxes have insulated his department from deeper cuts. Further, the tax may discourage younger drinkers, since higher taxes on tobacco and alcohol have an effect on underage consumers, who are price-sensitive.

I liked this story out of North Andover, where the Wine Connextion, a new store run by brother-sister duo Tina and Sam Messina, has started a campaign to detract people from making the voyage to New Hampshire for alcohol, hoping to save money by avoiding Massachusetts’ sales tax.

“We just wanted to make people aware of the fact that they can get the same good wines they’re traveling up north for cheaper here, even with the sales tax,” said Tina Messina, who has been handing out buttons with a crossed-out picture of New Hampshire Gov. John Lynch as part of the campaign.

“We’re trying to become more than just a really well-kept secret. Many people come into the store and say, ‘You’re cheaper than New Hampshire.’ So we decided to get the word out.”

As part of the sales tax holiday weekend of August 14-15, there is no sales tax on beer, wine, or hard liquor.

Many non-business retail items costing $2,500 or less are also exempt from the sales tax, but some items –motor vehicles, motorboats, meals, telecommunications services, gas, steam, electricity, tobacco products, and anything else costing more than $2,500 — are not.

The sales tax exemption applies to sales of tangible personal property bought for personal use only; purchases by corporations or other businesses and purchases by individuals for business use remain taxable.

The Chelmsford Board of Selectmen’s office was notified this week by the Massachusetts Department of Revenue (DOR) that it has seized the all-alcohol license issued to Hi-Way Farm Market located at 259 Littleton Road. The action was apaprently taken because of non-payment of state taxes. The listed owner of the license is Spiro Vrouhas.

Town Manager Paul Cohen told the local Chelmsford newspaper that the license could be auctioned, with the proceeds going to pay down the tax debt. The license is one of only seven full alcohol licenses that are issued within the town.

On July 12, the Board of Selectmen held a public hearing to discuss the revocation of the license, since the store was not open for business. At that time, the store’s stated intent was to reopen following some family health issues and refinacing issues.

Massachusetts voters will decide this November the fate of ballot questions that would repeal last year’s new tax on retail alcohol sales, reduce the sales tax rate from 6.25 percent to 3 percent, and repeal the state’s affordable housing law. Proponents of the measures submitted more than the 11,099 required signatures prior to a deadline earlier this month.

Liquor retailers and distributors in Massachusetts wish to see the alcohol tax repealed, with a return to the prior exempt status for alcohol. However, that would jeopardize hundreds of substance abuse counseling, educational, and treatment programs supported by the $93 million the alcohol tax has brought in during the past fiscal year.