Little justification for a liquor tax hike

Taxes on liquor should not increase unless there is an upward trend in costs to the state.

by Daily Editorial Board

On Tuesday, Minnesota Public Radio reported on the disagreements between Minnesota House and Senate Democrats on whether to pass a liquor tax hike. Both chambers have Democratic-Farmer-Labor Party majorities, and Senate Majority Leader Tom Bakk, DFL-Cook, and House Speaker Paul Thissen, DFL-Minneapolis, seem to agree on raising the sales tax on cigarettes.

However, the two are at odds over whether to raise taxes on alcohol. Thissen said that House Democrats are planning on proposing an increase to the liquor tax to offset the costs associated with alcohol, including DWI and health care costs. On Tuesday morning, MPR reported that Bakk said the Senate tax bill will not include an increase in the liquor tax.

While general sales taxes are often a favorable alternative to income taxes as ways the state can raise revenue, it’s not entirely clear why a raise in the alcohol tax is warranted. The higher taxes on alcohol and cigarettes, often dubbed “sin taxes,” are justified given that consumption of both comes at a cost to the state, and ultimately, the taxpayer. And a steady rise in the taxes on cigarettes in the interest of reducing the number of consumers could also be justified, given their particularly harmful effects on society: There is no safe way to smoke a cigarette.

However, the vast majority of adults who consume alcohol do so responsibly. Unless there has been a steady rise in alcohol-related costs throughout the span of several years, the justification for increasing the liquor tax is at best shaky. Also, given the craft beer boom occurring in the Twin Cities, it would be best to avoid adding unnecessary fears in the local business climate.

Unless House Democrats can prove that alcohol-related costs to the state are on the rise, the Legislature should not go through with an increase on the state liquor tax.