Mo. House bill would increase alcohol tax
March 11, 2008
A bill in the Missouri House of Representatives would phase out the sales tax on food purchases over six years and replace it with a tax increase on wine and liquor.
To balance a proposed decrease in the sales tax of food, a bill in the Missouri House of Representatives would also increase the wine and liquor tax.
The bill’s sponsor, Rep. Jamilah Nasheed, D-St. Louis, said she feels economic factors are straining Missouri citizens and proposed this bill as a way to help.
“Gas prices are steadily rising, the utility prices are steadily rising, foreclosure problems - we have a serious problem,” Nasheed said. “And if we can give those individuals who go to the grocery store every week a cushion at the register, they would be extremely grateful to those legislators that would shop for the common consumer.”
According to the Missouri Department of Revenue Web site, the existing state-imposed sales tax on food is 1.225 percent, with 1 percent allocated to education, 0.125 percent to conservation and 0.10 percent to parks and soils.
“What I’m looking to do is to reduce the food tax to .225 percent and do away with the 1 percent,” Nasheed said.
The remaining .225 percent that goes toward conservation, parks and soils, cannot be reduced due to state statutes, Nasheed said.
Nasheed said she wants to reduce the tax on food but still provide funding for education, an area she said is especially important, by creating a replacement tax.
The replacement tax would be on wine and liquor but increasing taxes on pornography or cigarettes is also being considered, Nasheed said. The pornography option proved immeasurable in terms of tax revenue generated from its sale and the cigarette option was simply unpopular, Nasheed said.
“From what I’ve heard, there hasn’t been a big increase on liquor in a long time,” Nasheed said.
Rep. Joe Smith, R-St. Charles, said he understands Nasheed’s approach, but he does not agree with her choice of alcohol as the supplemental tax.
“I think where she’s going to make up the money is a mistake,” Smith said. “She might be helping the lower class, but she’ll be hurting the working class.”
Smith said he’s not the only one who opposes the bill. During the bill’s hearing on March 4, several groups voiced their concerns, he said.
“Everyone from convenience stores to big grocers to the wine industry, even the international beer wholesalers, even though beer will not be affected by that,” Smith said.
The effect the bill could have on tourism for the Missouri wine industry was a chief concern, Smith said.
“People drive in from miles around, even from out of state, to visit the wineries in Missouri,” Smith said.
Nasheed said the average savings for consumers over a six-year period would be close to $79 million if the bill is passed, but Rep. Ed Robb, R-Columbia, said the figure might be irrelevant.
“It’s not going to pass, would be my best guess,” Robb said. “And it has a lot of problems with how it’s drafted. It doesn’t take into account things like supply and demand, which I insist that we talk about with something like this.”
Robb said with an increased tax on alcohol, Missourians would make the drive to neighboring states for cheaper purchases, especially in the areas of St. Louis and Kansas City, where state lines are close.
“When you have such a large percentage of our population living close to the borders of the state, you just provide another stimulus for them to move into Illinois or Kansas and buy their alcohol, because we’d be much higher than either state,” Robb said.
Robb said he thinks the effort to go to another state would be worth the money one could save by doing so.
“You’d save up and buy enough to make it worth your while,” Robb said.
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