June 15, 2009: Budget serves up alcohol tax

With the budget deadline drawing closer, revenue proposals that in past years might not be considered are now on the table. For example, the FY10 budget includes a proposed a 25 percent tax increase on wine and liquor that would amount to about $1  bottle on spirits and 75 cents per bottle on wine. Industry experts say the tax increase is expected to bring the state approximately $22 million.

While 25 percent may sound high, consider that New Jersey’s liquor tax is less than that of neighbors New York, Delaware and Connecticut and ranks 11th overall in the nation (Pennsylvania only sells liquor in state-run stores, so all profits go to the state). The state’s wine tax, currently $.70 per gallon, is even further down the list, at 22nd in the nation.

According to the Center for Science in the Public Interest, alcohol taxes do not disproportionately target low-income people-who already drink at lower rates than those with higher incomes-and will be of little, if any, burden on the vast majority of consumers.

New Jersey’s growing revenue shortfall has also renewed interest in a measure to allow supermarkets to sell wine and beer- something 45 states already allow. The state currently limits supermarket chains to two total liquor licenses because of a 1962 law adopted to prevent price fixing and monopolization.

As New Jersey and most other states struggle to overcome budget deficits, more options for economic recovery and revenue growth should be on the table. Adjusting the state’s wine and liquor tax to be more in line neighboring states is a good way to help New Jersey meet its fiscal needs.