Maryland Senator Antonio Hayes is sponsoring a bill to increase the state’s alcohol excise tax. The bill would increase the ad valorem component of the tax from 9 percent to 10 percent. The increase would be delayed two years for bars and restaurants because of the coronavirus pandemic.
An externality, in economics terms, is the side effect or consequence of an activity that is not reflected in the cost of said activity. Negative externalities caused by alcohol do not have much connection to the price of the product; it is determined by the volume.
Senator Hayes’ proposal is part of a larger trend in Maryland and across the U.S. of increasing narrowly targeted taxes in search of new revenue. While there are legitimate reasons for increasing and levying excise taxes, legislatures should proceed with caution in the aftermath of the pandemic.
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https://taxfoundation.org/maryland-alcohol-tax-revenue-health-care/