Legislation would increase tax on alcohol, cigarettes

By David McGrath Schwartz

Tuesday, March 17, 2009 | 2:12 p.m.

Draw no conclusions, we’re told, over this coincidence: St. Patrick’s Day is also unofficially “Vice Tax” day at the Legislature.

The Assembly Taxation Committee is scheduled to hear proposals that would dramatically raise taxes on alcohol and tobacco.

Members of the media — including the Sun — have pointed out the Democratic leadership’s refusal to acknowledge taxes will have to be raised to balance the state budget. But these sin taxes are considered the most politically palatable — the low hanging fruit.

That doesn’t mean interest groups won’t fight against increasing the taxes. And the hospitality industry warned that higher taxes on alcohol will hurt the industry.

AB277, sponsored by Assemblyman Bernie Anderson, D-Sparks, would more than double taxes on alcohol.

Taxes would be raised as follows:

- Hard alcohol, and anything with with higher than 44 proof, or 22 percent alcohol, would go from $3.60 to $7.86 a gallon.

- Alcohol with proof of between 28 and 44 would go from $1.30 a gallon to $3.43 a gallon.

- Alcohol with proof of between 0.5 percent and 28 proof – most beer and wine – would go from 70 cents to $1.77 per gallon.

The bill could raise as much as $100 million a year, according to Anderson.

The Distilled Spirits Council of the United States sent out a release warning such a tax increase could affected hospitality jobs.

“In the depths of one of the worst recessions in history, I can’t think of a less appropriate time for Nevada politicians to punish the hospitality industry – the cornerstone of the economy – with higher alcohol taxes,” said Council Vice President Adam Smith, in the news release.

AB255, sponsored by Assemblywoman Sheila Leslie, D-Reno, would add another $1 tax to a pack of cigarettes. Currently, the state tax is $0.80.

How much money the increased tax would raise is unclear because studies have shown that increasing the tax on cigarrettes causes sales to go down. One estimate, prepared by Legislative staff, showed it could raise as much as $251 million over two years.

The bills are scheduled to be heard this afternoon.