Sales tax on beer, wine and alcohol exceeding estimates

It's not exactly stop-the-presses stuff, but it turns out that for the first two months of collections, the imposition of the sales tax on beer, wine and alcohol in Massachusetts has exceeded projections by about 33 percent.

The tax took effect August 1, but revenue from sales tax is not reported until the 20th of the month, following, so the first month's collection was recorded in September. Now, with October collections in hand, the combined two month collection of sales tax on beer, wine and alcohol totals $20.5 million, beating the estimate of $15.6 million for those two months by nearly $5 million.

September collection was $9.2 million (estimate was $7.9 million); October collection was $11.3 million (estimate was $7.7 million). The overall revenue collection estimate for this fiscal year from this new piece of the sales tax is $79 million.

There is also a way to measure alcohol, beer and wine sales on a baseline basis. The state levies an excise tax on beer and wine (wholesalers pay it and it is included in the retail price) that amounts to a penny for a bottle of beer or 11-cents for a 750 ml bottle of wine, for instance. That excise tax has not changed.

Bottom line: the excise tax collection for September and October is up 1.1 percent, so at this stage of the fiscal year demand for beer, wine and alcohol has slightly increased even with the imposition of the 6.25 percent sales tax.

If you'll pardon the pun, the liquor business may be recession-proof.

Comments

[Robert Bliss]

T. Greene: New Hampshire has an excise tax on beer of 30-cents per gallon; the Massachusetts excise tax is 11-cents per gallon, which translates to 1-cent per 12 oz. bottle or can, while the NH excise rate is nearly three times as much.
Sales of wine and alcohol in NH are handled exclusively by state-owned liquor stores, which generate revenue and turn the profit over to the state. There is no NH excise tax on wine and alcohol - NH does not levy an excise tax on those items.

[T Greene]

I know NH doesn't have a sales tax on alcohol, but does it have an excise tax? If so, how does it compare to MA.

[Robert Bliss]

Paul, there is no such exemption.

[Paul Mendonca]

There are federal taxes on alcohol. There is a state excise tax additionally. Now the Massachusetts Sales Tax is calculated on the entire amount of the product and the Federal and the State excise taxes. That means we pay a tax on taxes. Seems to me we had a revolution over that once upon a time! I recognize it is expedient for the merchants but how is it legitimate to have tax on taxes? Is there a process to claim an income tax exemption at year end for all the booze we drink? Thank you.

[Robert Bliss]

You are correct. Non-alcoholic beer remains exempt from sales tax.

Bob Bliss
Director of Communications
MA Department of Revenue

[anne morad]

It is my understanding that non-alcoholic beer is non-taxable. Is this correct?

[DrewS]

I would never drive an extra 12 miles to save a few pennies.

At 24 miles round-trip, I'd use a gallon of gas, costing me almost $3.00. In addition, such a trip would use at least 45 minutes more of my time. So, for a case of beer, I'd be earning myself $0.32/hour for my time, or losing $2.68 after factoring in the gas.

I think it would be helpful to point this out in your advertising.

[Tim Donaghey]

The liquor business close to the NH border is getting slammed. I own a liquor store in North Billerica (about 12 miles from the Nashua, NH State Liquor Store) and we're down over 15% since the sales tax was implemented. Prior to the sales tax increase we were up almost 6% for Jan-Jul over 2008.

So, I agree with the recession proof statement. All of the wholesalers I've spoken with agree that across the Merrimack region business is down severely.