House committee cuts proposed alcohol tax increases

The alcohol department at a grocery store Albuquerque, NM CREDIT: Adria Malcolm for New Mexico In Depth

By Trip Jennings/ New Mexico In Depth

A nearly $1 billion tax package cleared the House Taxation and Revenue Committee on Monday with 1-cent to 2-cent tax per drink increases on beer, wine and liquor instead of much larger rate hikes sought by advocates.

Rep. Joanne Ferrary, D-Las Cruces, said following the committee’s nine-to-five vote to approve the bill that supporters hope to amend a 15-cent per alcoholic drink increase into the legislation as it moves through the Legislature over the final two weeks of the legislative session.

“We need lots of people to support that,” said Ferrary, one of the sponsors of House Bill 230, which would have imposed a flat 25-cent tax on alcoholic drinks and would have pushed the cost of most beer, wine and liquor up by 18 to 21 cents.

Supporters of raising the state alcohol excise tax have pointed to research that shows higher alcohol prices curb cirrhosis deaths, drunk driving, violence and crime, and even sexually transmitted disease. New Mexicans die of alcohol-related causes at nearly three times the national average and alcohol is involved in more deaths than fentanyl, heroin, and methamphetamines combined.

Even with the 1-cent to 2-cent tax increases on alcoholic drinks, industry lobbyists turned out Monday to oppose the alcohol excise tax provision in the omnibus bill. 
Jimmy Bates of Premium Beverage Distributing Co. a wholesaler for Anheuser Busch, said the provision would raise the cost of liquor by a smaller rate than beer. 

“You have the lowest ABV (alcohol by volume) alcohol product taking a 37 percent increase and the highest in hard liquor taking a nine percent increase,” Bates said. “You’re going to drive consumers away from four to five percent ABV beverage into a 40-percent one.”

Currently, state law taxes most beer at 4 cents per drink versus 7 cents for liquor.

In 2017, when a similar bill appeared before the Legislature, Bates told state lawmakers he would oppose any tax increase, however small.

Brent Moore, a lobbyist for Anheuser Busch, said the state’s large budget surplus this year made the alcohol tax increase unnecessary. And he reminded lawmakers that all of the money generated by the alcohol excise tax doesn’t pay for programs to treat excessive drinking, with half now going into the state’s general fund. Changing that is a necessary first step, Moore said.

In addition to the nominal tax rate increases, the bill creates an alcohol alleviation fund that would receive the money raised by the excise tax that currently goes to the state general fund.

The increases and the creation of the fund would take effect July 1, 2024, according to the legislation.

It appears the omnibus tax bill goes now to the full House of Representatives for a vote.

This story was originally published by New Mexico In Depth