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Tax hikes can mean losses DISCUS says.

Tax hikes can mean losses DISCUS says

While the number of state-level tax increases affecting liquor has doubled since the 1970s, states have not always benefitted economically from the hikes, the Distilled Spirits Council of the United States (DISCUS) recently said.

According to statistics released by the group, between January, 1980 and July, 1989, over 140 tax increases affecting liquor were implemented in 45 states. That compares with 72 increases in 37 states in the 1970s. The liquor industry now contributes about $3.2 billion in state and local taxes, DISCUS reported.

"The situation has reached the point where some states are experiencing economic losses from the tax increases on liquor," F.A. Meister, DISCUS president and chief executive officer, stated, explaining that higher taxes result in higher prices, which in turn result in lost sales and jobs. The seven tax increases implemented in 1989 are estimated to result in an additional two-percent decline in liquor sales in those states and 3,391 lost jobs, Meister noted.

In addition, the DISCUS statistics revealed that state and local governments suffered from the 19-percent increase in federal excise taxes imposed in October, 1985. These losses, the association reported, included $82 million annually in sales, 61,000 jobs inside and outside the industry, and $790 million in payroll. As a result, DISCUS continued, state governments paid $45 million in higher unemployment compensation.

"States contemplating tax increases on liquor should think twice," Meister said. "They must realize that in today's rapidly-declining liquor market, higher taxes accelerate the shrinking of the tax base."
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Title Annotation:Distilled Spirits Council of the United States
Publication:Modern Brewery Age
Date:Aug 7, 1989
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