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02/21/2017

More Tax Talk: Hikes Proposed in WV, NM; Equivalence Call in UK; Prohibition in India (excerpt)

Proposed excise tax hikes emerged in two more states in recent weeks.  Neither is modest.  Indeed, a pair of New Mexico legislators aim to make that state’s excise taxes the highest in the US.  They introduced bills in the House and Senate to raise the beer tax from 41 cents/gallon to $3.08 (a 7.5-fold jump), the liquor tax from $1.60/liter to $7.24, (a 4.5-fold hike) and the wine tax from 45 cents/liter to $2.14 (4.8-fold increase), reports the Sun News.  House Representative Joanne Ferrary called it a “win-win for our state budget and the health and safety of our residents.”  Back east, West Virginia’s Gov. Jim Justice proposed a “Save Our State” (SOS) budget, according to The Register-Herald, with $450.15 million in new taxes.  They include raising the beer tax from $5.50/bbl to $8 and increasing the wholesale liquor markup from 28% to 32%.  The governor claims to “hate tax increases.  I hate them,” but feels his plan is “the most painless way” to escape the state’s budget problems.  How serious is he about supporting his plan?  “I’m telling you, if you don’t do this you’re dead.  You’re dead.  You’re dead beyond belief.”

In the UK, Christopher Snowdon, a journalist who writes about lifestyle issues for the Institute of Economic Affairs, penned an article for The Telegraph recently that called for tax equalization. That issue has not been very public in the US in recent years.  Indeed, beer, wine and spirits producers are backing a federal bill to reduce excise taxes across the board, but does not equalize them.  In The Telegraph, Snowdon cites previous analysis that indicates public health advocates inflate “social costs” of alcohol misuse to include “all sorts of ‘emotional’ and ‘intangible’ costs, as well as lost productivity costs, none of which are borne” by non-drinkers.  While the UK government pegs social costs of £21 billion annually, “actual costs,” are closer to £4.6 billion, he insists, about half of what the UK government collects in taxes now.   To cover the £4.6 billion, Snowdon advocates a new approach: “a flat tax rate of 9 pence on every unit of alcohol sold.”  Currently, tax rates range from 7p per drink for some ciders up to 28p for whisky.  “A 9p per unit tax would pay for all the costs imposed on public services by alcohol abuse and would incentivize the development of lower strength drinks across the board,” Snowdon believes.  “It would effectively create a minimum price ‒ as temperance campaigners have demanded ‒ and would tackle alcohol duty evasion.  It is time to tax alcohol, not fluids.”  Note: temperance campaigners demand a much higher minimum price. (excerpt)

Publishing Info

  • Year: 2017
  • Volume: 34
  • Issue #: 7
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