Job-Threatening Liquor Tax Hike Defeated in Michigan

Published August 1, 2004

The Michigan legislature defeated Governor Jennifer Granholm’s (D) proposed tax increase on distilled spirits products in June, averting what would have been a severe blow to Michigan’s hospitality industry, according to an economic analysis by the Distilled Spirits Council (DISCUS).

The bill was defeated in the Michigan Senate on June 17. “The Governor says she wants to improve the state’s economy, but this plan will only put more Michigan workers on the street,” said Cathy Pavick, executive director of the Michigan Licensed Beverage Association. “An alcohol tax is really just a tax on the hospitality industry. Waitresses, bartenders, cooks, and small business owners will suffer.”

Dave Holliday, vice president of DISCUS, noted Michigan already has one of the highest distilled spirits taxes in the region, with half the price of a typical bottle of spirits going to taxes and fees. “Michigan’s beverage alcohol taxes are already about twice as much as those in Indiana,” said Holliday. “If Michigan raises its tax even higher, consumers will cross the border to shop and dine, which would drain Michigan’s tax revenues even more.”

The governor’s office estimated the proposal would have generated $30 million in new tax revenues. It would have increased the mark-up on spirits from the current 65 percent to 74 percent, an additional 9 percent tax for consumers. The May 19 DISCUS report concluded the bill would have left 1,700 hospitality workers unemployed and cost the state $10 million in tax revenue.

Radio Ads, Letters

A coalition of Michigan hospitality organizations led by DISCUS publicly opposed the proposed tax hike. The coalition represented thousands of Michigan hospitality workers and retail businesses.

A radio advertising campaign was launched to highlight the negative effects of the proposed hike on the hospitality industry.

“It’s time to tell the politicians in Lansing no more hospitality taxes,” a concerned waitress said in the radio ad. “We’ve already lost enough jobs in Michigan.”

A letter signed by Pavick and representatives of the Michigan Restaurant Association, Associated Food Dealers of Michigan, and DISCUS was sent to the governor and Senate Majority Leader Ken Sikkema (R-Wyoming) on June 14, days before the final vote.

“While you have labeled this increase a ‘sin tax,’ the fact is a tax on alcohol is a tax on Michigan’s hospitality industry,” the letter stated.

“Under this ill-conceived plan,” the letter continued, “1,700 Michigan hospitality employees will lose their jobs and will struggle to find new positions in this economy. What do you say to the hard-working waitresses, bartenders, retail employees, and small business owners who will be put out on the street as a result of your tax hike?”

Frank Coleman is a vice president of the Distilled Spirits Council. He can be reached via the group’s Web feedback form at