If all the tax increases the General Assembly passed last month have you down, there might be at least one bright side: Drowning your sorrows is still cheaper in Maryland than just about anywhere else.
Cigarette taxes, sales taxes, car titling taxes, income taxes and plenty more came under scrutiny as the legislature and Gov. Martin O'Malley sought to fix a $1.7 billion budget shortfall and add new spending for roads, health care and the environment. But Maryland's taxes on alcohol - which haven't increased since 1955 for liquor and 1972 for beer and wine - completely escaped the attention of the state's leaders last month, leaving the rates among the lowest in the nation and far less than the effective levies in neighboring states.
Efforts to raise the taxes in recent years have gained little traction, lawmakers and advocates say, largely because of a powerful and coordinated lobbying effort that has allowed the industry significant sway in how it is regulated.
Although the issue of raising alcohol taxes has garnered scant attention in the General Assembly in recent years, organizations with an interest in the sale or distribution of alcoholic beverages have paid Annapolis lobbyists at least $855,000 since 2005, according to State Ethics Commission data analyzed by The Sun.
Since 1999, those same interests have given $542,000 in campaign contributions to lawmakers and political action committees, according to a Sun review of data from the State Board of Elections. Almost a quarter of the liquor industry's campaign contributions are concentrated among the Assembly's top-ranking lawmakers. Former Gov. Robert L. Ehrlich Jr. took in almost $50,000 during the 2002 and 2006 campaign cycles, and O'Malley's campaign received $9,000 during the latter cycle, according to records.
"We have seen, over and over and over again, whether it's Capitol Hill or state capitals across the country, that special interests like the alcoholic beverage industry have had undue influence over the political decision-making process," said Del. William A. Bronrott, a Montgomery County Democrat who has sponsored legislation to increase the alcohol taxes four times in the past six years, all of which failed. "They have been successful in confusing the issue to the detriment of the greater good."
Steve Wise, a lobbyist and legal counsel for the Maryland State Licensed Beverage Association, said that the current tax level is appropriate because of the state's sales tax, which amounts to a double tax on alcoholic beverages. And efforts such as Bronrott's - which proposed to use revenues from the tax to step up alcohol and substance abuse treatment - are unfair to the industry, he said, since it already spends so much money on similar efforts.
"There are an awful lot of programs that are funded by alcohol suppliers, wholesalers or retailers aimed at the public costs of alcohol," Wise said.
In Maryland and D.C., the tax on spirits is $1.50 a gallon, the lowest rate in the country. West Virginia charges $1.70 and Delaware, $3.75. Pennsylvania and Virginia sell liquor directly through state-run stores, but the Distilled Spirits Council of the United States estimates they have effective tax rates of $6.54 a gallon in Pennsylvania and $14.54 a gallon in Virginia. Maryland's taxes on beer and wine are 10th- and 13th-lowest in the nation, respectively.
Alcohol taxes may have escaped notice in last month's special session because they make up a relatively small part of the state's revenue - about $30 million out of a $15 billion general fund. Similarly, federal taxes on alcohol have also not been increased for more than a decade.
"Shockingly enough, it does not raise a great deal of money," said W. Minor Carter, a lobbyist for the Beer Wholesalers' Council of Maryland. "Alcoholic beverages are susceptible to tax increases. The last time taxes were increased by the feds, consumption went down markedly, so the tax increase was, to a large extent, counterproductive. As a revenue raiser, it's not a particularly successful avenue."
O'Malley did not include higher alcoholic beverage tax levies in his proposed package of tax increases. Administration officials said the compressed time frame of the session prompted a focus on measures that had already passed at least one chamber of the legislature in a prior year, or had been the subject of committee hearings.
"The governor's proposal represented our best judgment of where consensus lied to pass a fair, long-term solution to the inherited $1.7 billion budget deficit - while protecting middle-class families and education," said O'Malley spokesman Stephen Kearney.
But Sen. Richard S. Madaleno Jr., a Montgomery County Democrat, said the special session was as good an opportunity as any in recent years to visit the low rate.
"Why has this tax in particular gone for so long without an adjustment?" asked Madaleno, who has also advocated for legislation to raise the levy to pay for more substance abuse treatment. "We just raised a whole bunch of taxes. This is the first time the sales tax was raised in 30 years, and the first time the income tax was raised in 40 years. ... Within the context of the special session where so many of these issues were addressed, this one received no traction."
In the 2007 regular session of the General Assembly, lobbyists and alcohol industry executives spoke out against efforts to raise the taxes, warning that such a measure could lead local breweries to leave the state and that Maryland's substance abuse prevention efforts were fully funded.
Bronrott characterized their comments as "scare tactics.
"Passing this isn't going to take away one dollar out of the pocket of anybody in the alcoholic beverage industry in Maryland," he said. "To me, it really epitomizes everything that the public fears about government at its worst."
The bill never made it past an initial reading in the House Ways and Means Committee, which handles state tax policies.
The conventional wisdom in politics holds that increasing such a "sin tax" would be unpopular, but recent polls - based both in the state and nationally - indicate otherwise.
One survey last year commissioned by the Baltimore chapter of the Open Society Institute of 1,214 likely Maryland voters found that more than two-thirds support increasing alcohol taxes to support funding for alcohol and drug treatment. In a 2005 nationwide poll for the Center for Science in the Public Interest, 71 percent of Americans said they supported a 5-cent per drink increase in federal alcohol taxes, which have remained unchanged since the early 1990s.
Carlos Hardy, executive director of the National Council on Alcoholism and Drug Dependence of Maryland, said passing the tax may just be a matter of organizing a broad coalition, much as the Maryland Citizens' Health Initiative did with the cigarette tax in the special session. On New Year's Day, the cigarette tax will go up from $1 a pack to $2 a pack, and the revenues from that increase will go toward expanding health care.
Hardy added that he didn't believe increasing the tax would be possible in the 2008 General Assembly session, but might be plausible the year after.
Vincent DeMarco, president of the Maryland Citizens' Health Initiative, said his group is considering proposing an alcohol tax along the lines of the recent tobacco tax increase. The tax would aim to reduce consumption and some of the ills associated with it, such as traffic fatalities caused by drunken drivers, DeMarco said. He added that research from the Center for Science in the Public Interest has found that making alcohol more expensive can reduce teen drinking.
Carter, the beer wholesalers' lobbyist, said many kinds of food are unhealthy and bring unwanted costs to the taxpayer, such as potato chips, but they aren't taxed.
"Unless people are deaf, dumb and blind, the alcoholic beverage industry has been very forthright about telling people to drink responsibly," he said. "When does individual responsibility come into play, rather than big government dictating what we can and can't have? Where do we stop in this argument?"
bradley.olson@baltsun.com