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Liquor Leaders Say Alcohol Tax is Sinking Sales

Alcohol delivered to retailers in Cecil County was 20 percent less than one year ago, before alcohol tax increase.

Liquor sales in Maryland have stagnated in the past year, showing almost no growth since 2011, a change the industry attributes to an increased alcohol tax driving Marylanders to cross state lines in search of cheaper booze.

Cecil County has been particularly hard hit by the tax, missing out on business that used to come from Pennsylvania and losing local business to Delaware.

In September, deliveries for all alcoholic beverages were down 20 percent from last year in Cecil County, and deliveries for distilled spirits were down 57 percent, according to figures from the Comptroller's office.

“There is very, very strong evidence that the poor performance in Maryland package stores is the direct result of Maryland’s decision to increase the beverage alcohol sales tax to 9 percent in 2011,” David Ozgo, chief economist for the Distilled Spirits Council of the United States, said.

In July 2011, the state tax on alcoholic beverages increased from 6 percent to 9 percent. The tax was imposed with the goal of raising money for health care and potentially decreasing underage drinking and alcohol abuse.

Vincent DeMarco, president of the Maryland Healthcare for All Coalition, which advocated for the tax, said the law has met those goals. DeMarco said the decrease in deliveries is the result of a drop in teen drinking and alcohol abuse.

"We think this law is going to save lives, and that’s what those numbers show," DeMarco said.

Ozgo pointed to another analysis by his organization that showed an increase of sales in Delaware by 8.8 percent, based on data collected from member companies; his organization, a trade association, represents some of the nation's top distilleries,.

“A lot of Virginia residents who used to come into Maryland in search of lower prices are simply staying home, and many Maryland consumers are voting with their feet and making their purchases in Delaware,” Ozgo said.

Ozgo appeared on a consumer behavior panel at the Board of Revenue Estimates Economic Advisory Forum this month. The members of the Board of Revenue Estimates—Treasurer Nancy Kopp, Secretary of Budget and Management T. Eloise Foster and Comptroller Peter Franchot—heard from a number of business owners in fields ranging from real estate to defense contracting.

Chuck Ferrar of Bay Ridge Wine & Spirits in Annapolis told the Board that Cecil County has been hardest hit and urged it to take the loss of jobs and revenue from businesses closing into consideration.

Ferrar said Cecil County has historically had the highest rate of consumption in the state, not because residents drink more, but because of the county's proximity to Pennsylvania, where alcohol restrictions are tighter, causing customers to head south to get cheaper drinks.

Said Ferrar: “You got to look at the whole picture..."

This story was provided by Capital News Service.

Do you think taxes are driving Marylanders to buy alcohol across state lines? Tell us in the comments.

Brent November 21, 2012 at 11:22 AM
I sincerely doubt people are even now running up to PA to get alcohol. And for all they trump up shopping in Delaware, it's simply not convenient to most of the state to do so. And is alcohol sales being down a really a bad thing?
DWAYNE COAKLEY November 21, 2012 at 12:00 PM
I know a lot of people who do most of their shopping in Delaware(cigarettes,booze, electronics,furniture and jewelry) only 30 minutes from harford county automatically saving 6%. I used to get gas there but they raised their taxes up with ours.
Pam Newhart November 21, 2012 at 02:25 PM
While I dont make special trip to DE to purchase alcohol, I do make a point to pick it up whenever I am there, as well as any other big ticket electronic items on my shopping list. Omalley needs to be sent a message. Raising taxes is never the answer to his budget problems. Reducing spending is.
William Watson November 21, 2012 at 02:56 PM
Have you ever noticed that bureaucrats like Mr. DeMarco and politicians who advocate their "feel good" causes often rely on largely anecdotal evidence for their reasoning? Mr. DeMarco's statement explaining the drop in liquor sales as somehow being related to a reduction in underage drinking is completely void of hard facts. While his theory would be a welcome outcome, it is more likely that the reduction in sales is due to less folks coming into MD to purchase and more from MD going out of state. There was a time when MD was known for being a haven for liquor bargains because of robust competition and little governmental interference. It is now just another victim of the mediocrity of the central planners in Annapolis.
Caroline November 26, 2012 at 03:49 PM
seems like if the drive to Delaware is worth the decrease in price (from a 9% tax to a 6% tax), they need to spend at least $166 to be able to afford a $5 special offer Indiegogo fund raising holiday SipSmart Straw - with that much alcohol purchased they need a breathalyzer to go with it!

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