Increased alcohol taxes proposed

Increased taxes on alcoholic beverages would be used to fund alcohol abuse-related expenses, under two bills held over by the House Health Care and Human Services Finance Division for possible omnibus bill inclusion.

Minnesota imposes two types of special taxes on alcoholic beverages: a fixed excise tax on manufacturers or wholesalers that varies by beverage type, and a gross receipts tax of 2.5 percent on off-sale and on-sale retailers. Rep. Karen Clark (DFL-Mpls) sponsors two bills that would increase both taxes in order to provide funding for chemical dependency treatment and law enforcement costs related to substance abuse.

HF1896 would double the gross receipts tax on retailers, with half of the proceeds going to the General Fund and half going to an “alcohol health and judicial impact fund.” The impact fund would help local governments cover alcohol-related expenses, like the cost of incarcerating DWI offenders.

“We are talking about a user fee,” Clark told the division March 16. “ (It) begins to pay for some of the incredible costs that are associated in our society and in our state with alcohol and chemical abuse.”

The second bill, HF2125, would increase the excise tax on manufacturers and set new procedures for chemical dependency treatment.

State costs associated with untreated alcohol and substance abuse are far-reaching, said Carol Falkowski, director of the Alcohol and Drug Abuse Division of the Department of Human Services. Untreated abuse can threaten public safety, compromise parenting, disrupt education, increase demands on the health care system and impair a person’s ability to keep steady employment, she said. A Columbia University study found Minnesota spent $2.8 billion on substance abuse and addiction in 2005.

The alcoholic beverage industry is already “uniquely taxed,” with total taxes reaching $300 million in 2008, said Joseph Bagnoli, an attorney representing a coalition of alcohol beverage providers and producers. He said the industry is being singled out, despite the fact that alcohol has no health detriments when used properly.

A companion to the gross receipts tax bill, SF3200, sponsored by Sen. Linda Berglin (DFL-Mpls), awaits action by the Senate Commerce and Consumer Protection Committee. Sen. Steve Murphy (DFL-Red Wing) sponsors SF1617, a companion to the excise tax bill. It was part of last year’s vetoed omnibus tax bill.