Liquor, Lodging Lobbies Oppose Proposed PA Drink Tax

Published September 20, 2013

A proposal to add an extra tax on alcoholic beverages in financially distressed municipalities has drawn the ire of the liquor industry.

David Wojnar, vice president of the Distilled Spirits Council, said “enough is enough” for taxes on drinks in Pennsylvania. Even New York, which boasts some of the highest taxes in the nation, has a lower state tax burden on spirits, he said.

“At a time when restaurant patrons are worrying about their wallets, and small businesses are deciding between raising prices or laying off bartenders and busboys, this tax increase would make life that much harder for a lot of people,” Wojnar said in a press statement.

The Local Government Commission Act 47 Task Force is prepping draft legislation that would give municipalities a way out of Act 47, the state-run program for fiscally distressed cities, townships and boroughs.

Possible 10% Tax

The proposal gives a five-year exit plan for Act 47, which includes the option to enact three different taxes, with a court’s approval. One is the “Optional Distressed Municipality Alcohol Consumption Tax,” an up-to-10 percent tax on alcoholic beverages sold at retail in bars and restaurants. Similar taxes already exit in Philadelphia and Allegheny County.

The Pennsylvania Restaurant & Lodging Association also voiced opposition to the proposed tax. Government affairs representative Melissa Bova said giving an option to levy the tax is no different than “signing new taxes on the dotted line.”

“Enabling municipalities to adopt drink taxes would quickly lead to a patchwork of local drink taxes across the commonwealth, hurting Pennsylvania consumers and businesses at a time when they simply can’t afford it,” Bova said.

The council’s release pointed out the taxes Pennsylvanians already pay on alcohol: a federal excise tax ($13.50/proof gallon), the Johnstown flood tax (18 percent), state sales tax (6 percent), and local sales tax (up to 2 percent), plus a variable rate bottle handling fee.

Variety of Options

Sen. John Eichelberger (R-Blair) co-chairman of the task force, said Tuesday the tax is meant to give municipalities a variety of options as they navigate their way out of fiscal distress, including taxes “that would most benefit their economic progress.”

Other optional taxes are a local services tax on those who work in the municipality’s borders, or a payroll preparation tax paid by businesses. Co-chair Rep. Chris Ross (R-Chester) said this allows municipalities to pick a tax that won’t necessarily push out their existing businesses.

“These are giving people options to try to figure out how to get the revenues in ways that make the most sense for them, and actually give them the strongest opportunity for economic development,” he said.

The legislation could be introduced in the General Assembly this fall, as the Legislature returns for session Monday.

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