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Lawmakers in Minnesota consider tax increase on alcohol

Two Rochester Democrats are considering a proposed increase in the state’s liquor taxes as a way to fund a drug court in Olmsted County.

A bill sponsored by Rep. Karen Clark, DFL-Minneapolis, would raise the taxes by 3.5 cents a glass on beer, 4 cents a glass on wine and 10 cents a glass on hard liquor. Money generated by the tax would go into an “Alcohol Health and Judicial Impact Fund,” with half the money dedicated to judicial and public safety costs and the other half to chemical dependency treatment. Rep. Tina Liebling, DFL-Rochester, is a co-sponsor of the bill.

“Liquor taxes have not been raised in a very long time, and we know that alcohol does a lot of harm in society, and it’s pretty clear that the amount of taxes we collect on alcohol doesn’t pay for the harm,” Liebling said.

But the measure faces strong opposition from liquor store owners, who say it would mean much higher costs for consumers. Under the bill, taxes on a 31-gallon barrel of beer would nearly quadruple, from $4.16 to $16.17. Ari Kolas, owner of Apollo Liquor, said those added costs will end up being passed to consumers. It could also hurt sales, with customers opting for cheaper products. He is also bothered by “the unfairness of singling out one or two beverages and a certain percentage of the population that drinks it.”

He added that as members of the Minnesota Licensed Beverage Association liquor store owners contribute money to fund education about the dangers of drinking alcohol. If lawmakers are going to boost taxes, he said, “We should have a more broad-based tax, instead of one on a specific industry.”

It’s been 26 years since lawmakers raised taxes on alcohol. The Minnesota House Taxes Committee agreed last week to consider including the provision as part of a larger tax bill. While the idea has the backing of some legislative Democrats, Gov. Mark Dayton has said he does not support raising taxes on alcohol.

For Olmsted County, the liquor tax could offer a way to pay for creating a drug court. The county has long sought funding for an additional judge to help handle the high volume of caseloads. One way to help make that happen would be to create a drug court that would be funded by the new tax. Rep. Kim Norton, DFL-Rochester, is sponsoring a bill to set up a local drug court and said she supports the alcohol tax as long as the money is dedicated for these kinds of uses.

“If I am going to vote for that, I want to see this drug court put in there,” she said.

But getting lawmakers to agree that money should be designated for a specific use could prove challenging. Rep. Greg Davids, the ranking Republican on the House Taxes Committee, said he is strongly opposed to the liquor tax and trying to dedicate the money for specific uses.

“If (Rep. Clark) wants to carry an increase on the liquor tax, that’s one thing. But we are not going to allow someone to come in with a tax increase for her pet programs,” he said.

The proposed tax increase would raise nearly $175 million for the state for fiscal year 2014 and nearly $200 million the year after that.

Four Daughters Vineyard & Winery’s winemaker Justin Osborne was deeply concerned when the liquor tax proposal was first announced. But he was relieved that the author has made changes to the bill to exempt small wineries like his in Spring Valley.

“This would actually help give us a competitive advantage,” he said. “We would also have an advantage over liquor stores and bars.”

Even so, he is generally not a fan of the idea of raising the alcohol tax and said it could lead to proposals to tax other things, like French fries to address obesity.

Rep. Tim Kelly, R-Red Wing, shares his opposition to the proposal.

“I just don’t understand why we want to dictate people’s behavior legislatively,” he said. “That is a very bad policy. I believe education is a much better form.”

Source: Post Bulletin