Those who sell beer, wine and soda in this state have a right to be upset about taxes passes at the end of the Legislative session last week.
After promising all session not to raise taxes, Democrats passed a new, 40 percent tax on the syrup used to make soda and doubled the tax on beer and wine to prop up the governor’s failed Dirigo Health program. The beverage taxes replaced a 50-cent increase on the cigarette tax that didn’t have enough political support to pass – a move that caught nearly everyone by surprise and left those who will be affected by the taxes no opportunity to offer input.
The heads of the Maine Restaurant Association and the Maine Beverage Association are now considering their options, including a petition to veto the legislation. Anyone who supports restaurants and small businesses and opposes price increases for consumers should get behind this effort.
As of Aug. 1, the state will begin taxing $4 for every $10 gallon of syrup used to make soda and 42 cents per gallon on bottled soft drinks. The tax on beer will increase from 25 cents to 54 cents, and the wine tax will go from 30 cents to 65 cents a gallon.
According to industry experts, the tax on syrup alone could cost an average McDonald’s $28,000 a year. Tim Haines, one of the owners of Sebago Brewing Co., said each of his restaurants goes through about 10, 5-gallon boxes of soda per week. Just for the syrup tax, he estimates it will cost each of those restaurants an additional $200 per week.
With such a big spike in taxes, restaurant and store owners will be forced to pass on these costs to consumers, meaning we can all expect the cost of beer, wine and soda to be going up on menus later this year.
Backers of the tax hikes say the $35 million they will raise is necessary to support the state’s Dirigo Health insurance plan, which is designed to provide coverage to the uninsured and reduce the cost of health insurance for small businesses and their employees. They argue that it makes sense to tax unhealthy products to pay for health insurance, the cost of which is driven up by unhealthy people.
This logic, however, is flawed on multiple levels. First, it’s hard to compare a tax on beer and wine to one on cigarettes – probably the most unhealthy product people can buy legally. Consumed in moderation, beer and wine have almost no detriment to people’s health. Studies have concluded that red wine in moderation is actually healthy. Soda obviously contains sugar and caffeine.
All right, a lot of sugar and caffeine, but what’s next? Coffee? Chocolate? Maybe we should tax people for neglecting to go the gym?
The biggest flaw is to assume that Dirigo Health is having a substantial impact on the health of most Mainers. It is providing coverage for fewer than 14,000 of this state’s 1.4 million residents. The vast majority of people who are not covered by the program have not seen a decrease in the cost of health insurance. We have seen it only add to our costs through fees on our insurance policies and now these new taxes.
It’s time to scrap this program and re-evaluate how the state is handling the high cost of health insurance. A good way to start would be by repealing these new beverage taxes, which have nothing to do with it.
Brendan Moran, editor
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