Owner Bill Irwin told his crew that he'd like to absorb the new tax, as he did last summer when Baltimore began collecting a two-cent surcharge on bottles. But he said he's been taking on a lot lately: Food and transportation costs are going up, and brewers are charging more for beer.

Not wanting to be on the vanguard of a price increase, Irwin dispatched a manager to walk the neighborhood and survey how other taverns would handle the tax. His scout found that owners or managers at six other bars in the neighborhood planned to tack a quarter to their price.

Republican lawmakers, who opposed the tax increases but did not have the votes to stop them, said bars and restaurants are already struggling.

Del. Steve Schuh, a Republican from Anne Arundel County, called the increase a "kick in the teeth" that could put the fragile hospitality industry "over the edge."

At least some drinkers, however, say they just aren't that sensitive to price.

"Nobody is going to stay home on a Friday because the bar is charging another quarter," said Mike O'Leary, 47, between sips of a pint of Oliver's Ironman IPA at John Steven. "It is a small amount to pay."

The new law also affects restaurants and liquor stores. But the biggest headache there has been reprogramming cash registers to tax food and beverages at different rates.

A more serious problem in the new law, restaurateurs say, is a little-noticed provision that taxes services connected to alcohol at the higher rate.

The mandatory gratuities that bars, restaurants and caterers charge to larger groups will be also assessed a 9 percent tax. Here's where it gets difficult: The higher rate may be applied only to the alcohol portion of the service charge.

"It's like trigonometry," said Marquis, the chef at Sláinte, who shook his head as it was described.

The solution, for Marquis' employer at least, is very straightforward: End the service charge, which they use only rarely, when they rent out a room for parties. Other price increases should make up the difference.

But businesses that rely on large groups can't quite do that. Edward Dopkin, a co-owner of Classic Catering People in Owings Mills, led a seven-hour meeting with his staff on Tuesday to talk about how the new tax would be applied.

Meticulous accounting will be necessary. Consider glassware: The surcharge for wine glasses will go to 9 percent. Water glasses, which won't be used for alcohol, will be taxed at 6 percent.

"I don't think anyone was aware of the complication for caterers," Dopkin said. "It goes fairly deep."

Deputy Comptroller Linda L. Tanton conceded that the wrinkle is "complicated for everyone." Three lawmakers who were involved with crafting the tax were unaware it was being applied to the service charge and said they'd be open to changing it. All wanted more information from Comptroller Peter Franchot before taking a position.

Republicans blamed the problems on the lightning speed with which the bill moved from concept to final passage. The Senate passed a 3 percent increase that would be phased in over three years, but the House leadership decided to impose the full increase in the first year.

Word of the House leaders' intentions circulated in the State House for about two weeks while the Senate version languished in the House Rules Committee. Then, on the Saturday before the session ended, the tax bill was rewritten and unveiled at a subcommittee meeting.

Lobbyists for the alcohol and hospitality industries looked defeated. Health care advocates bounced around the committee room with smiles.

Within hours, the full committee voted the new bill to the House floor, where it passed shortly before midnight after a raucous floor debate. The final version cleared the House and Senate two days later, hours before the legislature adjourned.

An earlier version of this story did not account for school construction funds going to Montgomery County. The Sun regrets the error.

annie.linskey@baltsun.com

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Sales tax surcharge



Beginning Friday, the state will require bars, restaurants and liquor stores to assess a 9 percent sales tax on alcoholic beverages.

The increase is expected to net the state an additional $87 million annually.

The sales tax on other items will remain 6 percent.