Cumberland Times-News

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November 17, 2012

Alcohol tax hike driving Marylanders across state lines

Sales have stagnated since increase took effect last year

rachael pacella Capital News Service

ANNAPOLIS — 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.

 David Ozgo, chief economist for the Distilled Spirits Council of the United States, said the group compared figures from 2011 to figures from 2012 and saw a .2 percent increase, which Ozgo said is below national averages.

Their analysis compared deliveries, or how much alcohol by the gallon is delivered to retailers in Maryland from wholesalers.

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,” Ozgo said.

Ozgo said another analysis from his organization, a trade association representing some of the nation’s top distilleries, showed an increase of sales in Delaware by 8.8 percent, based on data collected from member companies.

“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.

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.

Chuck Ferrar of Bay Ridge Wine & Spirits in Annapolis said he has not seen any effect on his business, but added that it was because he doesn’t operate near the state’s border.

Ferrar and Ozgo appeared on a consumer behavior panel at the Board of Revenue Estimates Economic Advisory Forum Thursday. 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.

Ferrar 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.

“You got to look at the whole picture, not ‘we’re gonna do this’ or ‘we’re gonna do that,’” Ferrar said.

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.

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