Florida Repeals Beverage Alcohol Tax

Published September 1, 2006

Florida lawmakers have repealed the state’s beverage alcohol tax, a move that could generate new jobs and millions of dollars in new economic activity.

Gov. Jeb Bush (R) on June 9 signed into law the permanent repeal of the state’s “by-the-drink” tax on beverage alcohol at all on-premises locations, including restaurants, bars, taverns, and hotels. Experts say the new law, which goes into effect July 1, 2007, could spur growth in Florida’s hospitality industry.

Little Revenue, Big Costs

“The ‘by-the-drink’ tax combined two of the very worst characteristics of onerous taxes,” said state Rep. Fred Brummer (R-Apopka), who sponsored H.B. 7105 to repeal the beverage alcohol tax. “It generated small amounts of revenue but was costly for business and government to administer.”

An economic analysis by the Distilled Spirits Council (DISCUS), a trade association representing the makers and marketers of distilled spirits in the United States, concluded the repeal could generate more than $30 million in new economic activity for the state, and consequently the creation of more than 400 jobs.

According to DISCUS, taxes in Florida already make up 52 percent of the average cost of a 750 ml bottle of spirits. Florida is one of only two states (the other is North Carolina) that had applied a per-volume tax to on-premises beverage alcohol product sales.

‘Dumb Idea, Bad Policy’

“The tax was a dumb idea and bad policy from the beginning,” Brummer said. The tax was implemented about 15 years ago. “The tax was imposed in a late-night bill amendment without public input. Further, it targeted small businesses that were, at the time, not organized well to prevent that type of political chicanery. The tax was bad tax policy born of a bad legislative practice.”

State Sen. Mike Fasano (R-New Port Richey), author of a similar repeal bill in the state senate, noted the drink tax in Florida “was costing the taxpayers more to collect and process the paperwork” than it was generating in revenue. “Years ago we promised the taxpayers and residents of Florida we would do away with the tax once and for all. This year we fulfilled our promise.”

The Florida Restaurant and Lodging Association (FRLA) had worked for years to inform legislators of the excessive cost the tax has imposed on Florida’s businesses.

“Currently affecting 21,646 Florida businesses, the drink tax is an expensive and cumbersome tax to collect,” said FRLA President Carol Dover before Bush’s veto. “Today the alcohol beverage surcharge costs Florida’s restaurants and hotels more to collect than is remitted to the state.”

Much-Needed Break

DISCUS Vice President Jay Hibbard, whose organization worked closely with Florida’s hospitality industry to support the repeal, commended Bush and the legislature for repealing the tax.

“Florida’s restaurants, bars, hotels, and tourist attractions are going to get a much-needed break with the repeal of these regressive taxes,” Hibbard said. “Lower taxes stimulate the economy, which creates jobs. With all of the money Florida puts into its hospitality industry, it just makes good business sense not to balance the budget on the back of the hospitality industry.”

Ben Jenkins ([email protected]) is director of communications at the Distilled Spirits Council of the United States.