This is an extended version of an article I feature today on my Examiner.com page. Feel free to read it as I get takes on the proposed “dime-a-drink” tax from three candidates for Delegate: John Hayden, Dustin Mills, and Marty Pusey, along with State Senate candidate Chris Jakubiak. He and Hayden favor the tax while Mills and Pusey are opposed. Then come back for my argument on this.
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John makes some good points, but there are two items he didn’t consider. One is that sin taxes generally don’t bring in the revenue promised, and even the fiscal note for the 2010 Senate bill notes, “to the extent that the tax increases proposed by the bill result in a higher incidence of cross-border sales activity than is accounted for in the estimate, revenues would in turn be lower than estimated. This would most likely apply to the sale of distilled spirits, since these sales are likely to be more price sensitive than the others.” State beancounters estimated the tax would raise over $200 million but if they count on the revenue and it doesn’t come, who will make up the difference? We will.
Secondly, where does the taxation stop? As proposed, this would be a nearly sevenfold increase in the tax on distilled spirits, over sevenfold jump in the wine tax, and raise the beer tax by a factor of nearly thirteen. If passed, Maryland would have the second-highest tax on distilled spirits and highest taxes on wine and beer in the nation. Is that a way to portray being business-friendly?
What makes me even more incredulous is that Hayden would be representing a district where a significant percentage of that tax would be raised – walk into any Ocean City nightspot during the season and you would see hundreds or even thousands of patrons with a drink in their hand. It’s a highly competitive environment and these businessmen don’t need to give consumers any excuse to take their dollars up to Delaware (where drink taxes are also high but lower than those proposed.)
And while John advocates the drink tax, he stops short at raising the cigarette tax.”Any increase (in the cigarette tax) would be an unfair and harshly punitive tax on addicted smokers,” he said. And a drink tax would be different?
But the largest difference may be in philosophy. Where is it decreed that the government needs to pay for health insurance anyway? Hayden argues that the funding for these programs has to come from somewhere, but perhaps the better question lies in the need to have some of these programs at all. There’s no question that some in society need assistance, but does that funding really need to be from the government and does it need to come in a form which enhances Maryland’s reputation as a high-tax state?
It’s worth noting that many of those who signed the pledge are incumbents, but even for this noble cause they couldn’t be bothered to even have a committee vote on the bill last year – probably because they were afraid to back any tax increase in an election year. If they can’t stand up for principles even though the cause is so right in their eyes, why should we listen to them?
