Tax cut on retail liquor sales making its way through Michigan Legislature
A bill that would cut taxes on liquor sales at retail establishments is quietly making its way through the Michigan Legislature.
The bill, which would carve a $14 million hole in the state budget, would eliminate a 1.85 percent tax on sales of distilled spirits at off-site premises — meaning grocery stores and party stores, for example.
Taxes on liquor sales at retail establishments would fall 1.85 percent under a proposal being considered by Lansing lawmakers.
File photo | AnnArbor.com
Supporters describe the bill as a way to boost Michigan retailers and eliminate an extra tax on liquor sales that does not apply to sales at restaurants.
But the legislation, which would take effect Oct. 30, has drawn the ire of a policy group that fights laws that expand the availability of alcohol.
Mike Tobias, executive director of Michigan Alcohol Policy, an all-volunteer group, said the legislation “makes no sense” in light of the state’s budget problems and the societal implications of lowering alcohol taxes.
“Price is a factor in consumption and alcohol related problems,” Tobias said. “In general, the higher the price, the lower the problems. Conversely, the lower the price, the higher the problems.”
An analysis by state fiscal analyst Josh Sefton showed that eliminating the extra 1.85 percent tax on retail liquor sales would lead to a $14 million drop in tax revenue for the Liquor Purchase Revolving Fund, dollars that are “regularly transferred to the General Fund,” Sefton wrote.
The bill does not specify how the lost revenue would be made up. The Legislature in May approved a balanced state budget for 2011-12, eliminating a structural deficit, raising taxes on many seniors, cutting business taxes and slashing funds to public schools, higher education and municipalities.
Ari Adler, a spokesman for Speaker of the House Jase Bolger, R-Marshall, said in an email that the speaker “supports the bill in concept,” although “there are still questions about the budget impact.”
“It would help eliminate an additional tax on alcohol not imposed by other states, which means businesses in our border counties in particular would benefit,” he said.
The bill has been referred to the House Committee on Regulatory Reform, which is “reviewing all aspects of the bill and the fiscal impact,” Adler said.
State Rep. Hugh Crawford, R-Novi, chairman of the committee, did not respond to a request for comment.
It’s not clear whether the state’s major retailers are backing the bill.
Tom Scott, a spokesman for the Lansing-based Michigan Retailers Association, said his group hasn’t “been involved in this legislation.”
A spokesman for Michigan-based grocery store chain Meijer did not respond to requests for comment.
Tony Karim, owner of Ann Arbor Party Center on Jackson Avenue, said the proposal would help his business, in part because price is the main factor that his customers consider.
Do lower prices translate directly into more sales?
“Yes, 100 percent,” Karim said.
Tobias said his group's research shows that in 2010, 23 states introduced bills to raise alcohol taxes, though none were approved. So far in 2011, only Maryland has successfully raised taxes on alcohol, he said.
He said Michigan Alcohol Policy wants to raise the excise tax on beer, which currently amounts to about $6.30 per 31-gallon barrel, or 1.9 cents for a 12-ounce serving.
For now, his group is asking its supporters to contact members of the House Committee on Regulatory Reform to lobby against the bill.
“I think the vast majority of citizens support” the current tax structure, he said. “If they really thought about this issue, I think they’d say alcohol is pretty cheap, it’s pretty accessible."
Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.
Comments
doggycatlady
Tue, Oct 11, 2011 : 7:42 p.m.
This will really help the people who will lose jobs when the movie industry leaves Michigan. Now they can just go out, get a cheap bottle of booze and pass out.
snapshot
Fri, Jun 17, 2011 : 3:53 a.m.
Let's tax subsidized golfer's and we could completely eliminate the extraordinary Michigan taxes on liquor which costs about 1.5 times as much as other "non control states". It's the great Michigan rip off, enough to drive one to drink water and incur the health risks.
average joe
Fri, Jun 17, 2011 : 1:13 a.m.
And this tax decrease will accomplish what...? I don't believe it will add one more job in this state.
aareader
Thu, Jun 16, 2011 : 9:07 p.m.
Now let me see if i understand this. We need revenue so the Nerd and the Legislature raise taxes on fixed income folks ( oops... some but not all)... then we give a tax cut to businesses so they can/will hire more people... but there is no guarantee businesses will.... we want a first class education but cuts are made at all levels K thru College.... and now we need to lower the Liquor Tax because it is too high????? Guess I will not drink to that... Edward R Murrow's Ghost and CASH have it right. This insane logic needs to be fixed to get Michigan back. It would be nice to believe our Elected Officials would serve all of the people.. not the ones that gave them biggest special interest donations. One could hope.
Mr. Tibbs
Thu, Jun 16, 2011 : 6:17 p.m.
perfect. make it cheaper and easier to get drunk, instead of cheaper and easier to afford to get to work the next monring.....and I can't call these lawmakers the names they rightfully earned because if I did this blog-o-sphere would yank my comments! cut taxes on gasoline......
outdoor6709
Thu, Jun 16, 2011 : 4:39 p.m.
I have no idea why the 1.8% tax was put on liquior. It is part of the philosohy that we need more & more tax revenue. At some point it all adds up and business activity is reduced. For all of the workers that work for the government, I understand why you are resistant to people keeping their own money vs. funding the government, but long term Michigan is changing. We need to lead or we will be in worse shape.
outdoor6709
Thu, Jun 16, 2011 : 3:33 p.m.
As usual we are split into two camps. Let's tax everything and give the money to someone else. The other group wants to keep their hard earned money and make their lives better. Look at the Canadian model, cut government spending, do not fund every idea politicians have, new bridge, more welfare, bridge cards for millionares, bridge cards for college students, fancy houses for college presidents, high speed rail. For several years I gave liquor for Christmas presents. I drove to Clear Lake, In. spent about $ 1,000 and after gas still saved about $500. parking lot was full of Michigan cars. State lost $60 on my purchases. Michigan needs to compete with other states. Needs to lower states cost of doing business. Does doing the same thing forever work? Sort of like the last 8 years.
Tim Belcher
Thu, Jun 16, 2011 : 3:53 p.m.
So lowering the tax by 1.8% will make a significant difference? And following the Dexter bears around in the woods to see what they do do is important biological research.
hermhawk
Thu, Jun 16, 2011 : 3:16 p.m.
This is the GOP controlled legislature's way of saying, we don't care to serve those in needs. We'll cut the budget even more and if you don't like it, save what little money you have in taxes with this bill, go to the liquor/party store and in the name of Ray Charles, "go get stoned." And if you happen to drop dead, so be it.
1bit
Fri, Jun 17, 2011 : 1:30 a.m.
As others have noted and as is stated in the first sentence of paragraph three of the articles, the legislation passed "unanimously" through the state Senate. Unless the GOP has mind control of the Democrats, blame can be shared in a bipartisan fashion.
janofmi
Thu, Jun 16, 2011 : 2:54 p.m.
So the article reminded us: "The bill does not specify how the lost revenue would be made up. The Legislature in May approved a balanced state budget for 2011-12, eliminating a structural deficit, raising taxes on many seniors, cutting business taxes and slashing funds to public schools, higher education and municipalities." So who is left to make up the tax...let's see we could take more from schools, food programs, home health care assistance, Or hey, how about prisons so that those that are there on alcohol related crimes would have less.... When we do these things we can give people who want to drink a break....and maybe even have more drunk drivers on the road. Oh but wait, we have cut law enforcement budgets, there are fewer officers on the road to catch them.... around and around and around, but it comes down to lets reward big business and find ways to hurt the little guys. I signed the Rich Snyder recall petition, have you?
Gordon
Thu, Jun 16, 2011 : 12:32 p.m.
It doesn't make any diiference to a consumer that neighboring States sell liqour for a 1/3 less? I think it does. Combining a trip with a stop at another States Liqour establishment and purchase a years supply robs Michigan of all it's revenue. For me the difference allows me to purchase top shelf instead of lessor quality liqour. As pointed out other States allow for a broader selection. As to beer here is an example of destroying one of the fastest growing industries (mom & pop) by raising taxes in the State Craft brewing. The tax opportunity comes from the total picture not some minor specific tax by it's self. Liqour, smoking, are usually considered fair game by tax authorities because they are sin items. Drunkards don't create Craft Beer or they wouldn't sell any. The fact that individuals have invested the capital & time to create a new small business employing people doesn't mean the State should rear it's tax head & put them out of business. Remember we are on a job creating path.
Tim Belcher
Thu, Jun 16, 2011 : 2:11 p.m.
Sorry, not an elimination of the tax just a minor reduction. Still Tom your comment doesn't make a point.
Tim Belcher
Thu, Jun 16, 2011 : 1:34 p.m.
OK Tom, I've read your comment a number of times and can't figure out what your point is relative to the bill eliminating the liquor tax on retailers. If it is sarcastic, I'm sorry I missed that too.
Carole
Thu, Jun 16, 2011 : 12:04 p.m.
Dumb, dumb, dumb. When the state is already in the "red" why are we cutting these taxes. It won't change the price that an individual pays -- bet you a dollar on that note.
Tim Belcher
Thu, Jun 16, 2011 : 1:30 p.m.
I agree Carole, but it will increase the PROFITS of retailers and after all isn't that what our new govenor is all about? Purchasing liquor is a choice and a luxury. Can't afford the tax? Don't buy it. You can live without it. Maybe even improve your life. Makes no sense to cut $$ to education on one hand, and then cut this tax and reduce the revenue to the state. There has to a voice or hopefully a number of voices of reason in Lansing to see and expose the folly of this bill. Geez, get your act together legislators.
Rod Branham
Thu, Jun 16, 2011 : 10:48 a.m.
Wow.......they yanked my initial comment so let me rephrase this. There is a drive on to recall Rick Snyder and I have signed it. This is just one more reason why. Snyder has put more taxation on the retired seniors and now wants to take more money out of the state coffers to aid the drunks? Makes all kinds of sense to me. I say RAISE the taxes on alcohol and beer (which hasn't been raised in eons on beer). Then maybe they could leave the seniors alone. They have already paid their dues since before he was born and while he was wearing his diapers! To take $14m out of the state at this time is crazy. And why would this pass so fast and quietly?? And they wonder why people are leaving Michigan........................
Lovaduck
Thu, Jun 16, 2011 : 3:25 a.m.
I actually thought I was reading a satirical article in THE ONION!
David Briegel
Thu, Jun 16, 2011 : 3:10 a.m.
Congrats Slickster. Excuse me, MR. Slickster. Due respect. You are giving new meaning to that old phrase "let 'em eat cake". Tax the poor, retirees, cut education and aid to the poor, but make certain the boys at the club get cheap martinis. You TeaPublicans sure do have your priorities! Feel better now?
JSA
Thu, Jun 16, 2011 : 1:48 p.m.
Want to explain why the vote was unanimous then. Stick to the facts.
Homeland Conspiracy
Thu, Jun 16, 2011 : 1:50 a.m.
"State Tax Cuts Estimated to Save Alcoholics and College Students" Alcoholics Go To AA Meetings, Drunks Go To Bars! BIG differences
amlive
Thu, Jun 16, 2011 : 4:25 a.m.
Recovering alcoholics go to AA meetings. Only conventional alcoholics (aka, drunks) will be considered eligible for this tax break. Think of it as a "buy 54 bottles, get your 55th free" special provided by the state.
Marvin Face
Thu, Jun 16, 2011 : 1:46 a.m.
This is excellent news! I will save scads of $!
Maxwell
Thu, Jun 16, 2011 : 1:32 a.m.
Its real simple folks - the people who bought and paid for the legislature are calling in their marks.
johnnya2
Thu, Jun 16, 2011 : 12:33 a.m.
The Michigan retailers must really have the current regime in their pocket. I have NEVER heard a consumer complain about item pricing in stores and I have NEVER heard anybody complain about a 1.85% tax on a LUXURY item. If you do not want to pay a liquor tax you do not have to ever pay one. I would actually prefer to see this stay in place AND add a tax on beer and wine. I would increase tobacco taxes and gas taxes and start taxing marijuana. If hard liquor can add $14 million to the budget a 1.85% increases in the beer tax would account for at least that much. I would bet even more. Why not throw that money back into colleges and education or infrastructure. This is insanity. I guess a drunken business climate is what the Rickster believes in?
Tom Joad
Thu, Jun 16, 2011 : 12:18 a.m.
I get all my single malt scotch imported on trips to California. I use the BevMo as my private duty-free shop. The taxes on liquor are simply ridiculous.
Knobby Kabushka
Thu, Jun 16, 2011 : 12:08 a.m.
I'm sure they have a plan to replace this tax income and I'm sure it will be on the backs of the seniors, like maybe a 1.85% disposal fee added to the price of depends...
amlive
Wed, Jun 15, 2011 : 11:57 p.m.
There simply has to be something more to this if the initial bill passed unanimously. For me to see close to a $20 savings per year I would have to drink more than a $20 fifth of liquor each week. It's just one of those things that makes no difference to the end consumer, is not going to change anyone's purchasing decisions, and therefore the argument that it may affect retailer's sales in any way has very little credibility. Even if we're talking about retailers near state borders, someone would have to be buying a few hundred dollars worth of liquor for this 1.85% difference to add up enough to cover gas for a 5 mile trip to another store. Hardly seems a worthy reason to knock 14 million off state income, yet it passed unanimously? There has to be something else going on here that I just don't get.
whodat
Wed, Jun 15, 2011 : 11:19 p.m.
So, will this $14M in lost tax revenue give Snyder another reason to cut education spending?
tdw
Wed, Jun 15, 2011 : 10:27 p.m.
Well, I really and I mean REALLY hate to agree with you Libs here and I'm always for tax cuts but this is rediciouls ( sorry I don't have spell check for ridiculous )
average joe
Wed, Jun 15, 2011 : 11:48 p.m.
Yes- I can't believe I'm agreeing with the same folks you mentioned either, but this bill absolutely makes no sense.
Dr. Rockso
Wed, Jun 15, 2011 : 10:16 p.m.
Finally a tax break for the poor and homeless. Thanks for everything Rick and Company!
Cash
Wed, Jun 15, 2011 : 10:15 p.m.
First thing this Republican congress did to help out Meijer, Kroger et al was to stomp on the consumer and allow the retailers to sell merchandise without even placing a price tag on it. Then they raised taxes on the elderly and the working ppor. Now they want to help the retailers by giving them a big break on liquor sales. Exactly how much did the retail food industry donate to the party in this election? Nathan can you report this information please?
zeeba
Wed, Jun 15, 2011 : 10:06 p.m.
Here's a plan - raise the tax to 17 percent, eliminate the state-imposed price minimums on liquor and open up the distribution system. Prices will drop and the state will get more revenue. The only difference is the distributors and retailers will have to compete on price like everyone else. Liquor is insanely expensive in this state - I regularly find prices that are one-third to one-fourth lower in Chicago.
1bit
Wed, Jun 15, 2011 : 10:05 p.m.
The only way this tax cut makes sense is with a compensatory increase in the beer tax. Raising the beer tax from 20 cents/gallon to 28 cents/gallon (national average) would offset the lost revenue. Better yet, forget the tax cut and just raise the beer tax (which hasn't been touched since 1966).
Subroutine
Wed, Jun 15, 2011 : 10:01 p.m.
This tax cut makes no sense at all. However, my guess is that there is more to this story than is being told in this article.
Edward R Murrow's Ghost
Wed, Jun 15, 2011 : 9:42 p.m.
That $20 can of Jack Daniels is now going to be a whole 37 cents cheaper. Now they'll be flying off the shelves!! Hope the folks down at the JD distillery are ready for the increased demand that will result. What a stupid idea, one that can make sense only in the "Through the Looking-Glass" world of the Michigan RepubliKan Party. Good Night and Good Luck
JSA
Thu, Jun 16, 2011 : 8:32 p.m.
Ghost, The Beer, Wine, and Liquor industry has owned the Legislature for decades. It might give us all collective heart failure if any Republican or Democrat tried to raise the taxes. And the taxes on beer and wine should go up and this tax should not go down. Never going to happen with the current people in the legislature.
Edward R Murrow's Ghost
Thu, Jun 16, 2011 : 4:28 p.m.
Whatever works. Whomever voted for this bill is, indeed, dim. But the bill's sponsor is Senator Joe Hune, a RepubliKan from Howell. Cutting taxes further given what has happened to state revenues makes no sense whatsoever and, given the math of this tax that I have outlined, this is just cutting taxes for the sake of cutting taxes. Democrats likely voted for this because of the tax-cutting fever that is gripping this state. Shame on 'em. It's time that someone stepped up to educate the population about the true costs of these tax cuts. So, yes, on this issue, they are dim. There. Do ya feel better? Good Night and Good Luck
JSA
Thu, Jun 16, 2011 : 1:45 p.m.
Ghost, read the article. The vote was unanimous. Both parties voted for it and yes it is stupid. The Michigan Legislature has been owned lock, stock, and barrell for years by the Beer, Wine, Liquor lobby. If you want to keep ranting "RepubliKan" maybe the rest of us should say "Dimocrat."
Edward R Murrow's Ghost
Thu, Jun 16, 2011 : 3:23 a.m.
can = typo. OK, $23 per bottle $23 x 1.85% per bottle = 42 cents per bottle. So this will save you 42 cents every time you buy a bottle of JD, With that savings, after having 54 bottles you will have saved enough to buy a 55th bottle. This makes no sense whatsoever. Good Night and Good Luck
RunsWithScissors
Thu, Jun 16, 2011 : 1:38 a.m.
A $20 can of J.D.!!! Tell me where! I'm currently paying in the neighborhood of $23 per can (can = fifth o' liquor). Heck, who am I kidding? I would pay as much as $23.50.
amlive
Wed, Jun 15, 2011 : 9:13 p.m.
Sorry, but how dumb is this? First of all, if people want to buy liquor, they're going to buy liquor. Liquor sales are hardly going to see any change if a $9.95 bottle of cheap whiskey costs 18 cents less. Second, are liquor prices actually going to change at all? Doesn't the state set mandatory prices on liquor, and if so are they going to cut their minimum shelf prices by 1.85 cents on the dollar? Third, when our state finances are already in such bad shape, who's idea was it to cut a tax that I've never heard anyone complain about, and is going to make no difference at all to the end consumer. What's the headline supposed to be - "State Tax Cuts Estimated to Save Alcoholics and College Students an Average of $15-$25 Per Year"? Come on, really? Is this really so important right now, and is it in the best interest of Michigan citizens. Who's really going to benefit from this, huh?
Bogie
Wed, Jun 15, 2011 : 9:02 p.m.
Glad to see any tax cut, but how about something like eliminating the sales tax (michigan has a sales and gas tax on fuel-one of very few states) on gas! That's double taxation too. I'm on my way to get my medical marijuana, and a pint of cheap liquor..that's Pure Michigan.