Massachusetts lawmakers considering doubling alcohol tax, adding sugary beverage tax

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Alcohol and sugary drinks in Massachusetts could carry a heavier price tag if two proposed bills are passed.

Rep. Kay Khan, a Newton Democrat, is hoping to double the state’s excise tax on alcohol and create a new tax on beverages high in sugar. The taxes, she said, could net $435 million in revenue to fund public health programs, including some for substance abuse.

Massachusetts currently taxes alcohol at different rates depending on its strength, variety and volume. Wine, for example, is taxed at a lower rate than a 40% alcohol by volume rum. But the bill, if passed, would double all alcohol excise taxes across the board.

Excise taxes are charged to the producer of the product. They are considered an indirect tax on customers, since a manufacturer will tend to cover the increased cost by raising the price of the product.

The alcohol bill would change tax rates that Sen. Adam Hinds, the co-chair of the Committee on Revenue, said have not been raised in decades, WHDH reported. While the bill does not address the state sales tax, Hinds said that taxing alcohol at the same 6.25% rate as other products could earn the state $120 million in new revenue.

In 2010, voters rejected a sales tax on alcohol after the state’s general sales tax was raised from 5% to 6.25%.

By doubling the excise tax, Khan said the state would take in $67 million more in revenue that could be used for substance abuse programs, WHDH said. The bill would create a “substance abuse health protection fund” to direct money from taxes into necessary programs.

The Massachusetts Package Stores Association has rejected the idea, WHDH said, saying it would drive people to purchase alcohol from out of state, either by ordering online or driving to New Hampshire, which does not tax alcohol.

Rob Mellion, executive director of the MPSA, said New Hampshire already markets to Massachusetts customers on its lower costs.

“When you raise the excise tax, you’ve just given them a new campaign,” he said.

The sugar beverage bill would tax drinks in a tiered structure depending on their volume and sugar content. It would add taxes up to 3% per ounce to drinks with more than 7.5 grams of sugar.

The tax, Khan said, could raise $368 million for public health, nutrition programs and drinking water improvements in schools, WHDH said.

“$368 million is a lot of money that could be poured into better health services,” she said.

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