Scott Brown’s come-from-behind victory leaves merchants more hopeful that an angry electorate will vote to repeal the state’s new sales tax on alcohol in November.
Rick Curtis certainly was hopeful about the prospects for a ballot question to erase the new sales tax on alcohol before Scott Brown’s come-from-behind victory on Jan. 19.
But the owner of two liquor shops in Weymouth and Cohasset now figures that the referendum is a slam dunk. Curtis says the decision to send a Republican to replace Ted Kennedy in the U.S. Senate shows the extent of frustration among Massachusetts voters.
“For as long as I can remember, for the first time the word ‘tax’ is a four-letter word to the people of our state,” Curtis says. “I’ve never known a better opportunity for us to send a clear message to Beacon Hill that you can’t just tax us anytime you want.”
Brown’s victory sent ripples through Washington’s world of power brokers. But the impact will be felt in Massachusetts as well. Just look at the state’s package store owners, who believe their chances to repeal this new tax have improved dramatically.
If you’ve bought a six-pack of Sam Adams or a bottle of chardonnay at a store in the past six months, you’ve probably noticed this tax. Last summer, as you may recall, the Legislature decided to raise the sales tax from 5 percent to 6.25 percent to help plug a big, ugly hole in the state budget. At the same time, lawmakers also decided to apply the tax to beer, wine and spirits. That meant the sales tax on alcohol essentially went from zero to 6.25 percent overnight.
Not surprisingly, the move angered the state’s package store owners. They didn’t have much time to organize an effort to stop the new tax from moving through the Legislature. So they did the next best thing: They pulled together a ballot question so the voters could repeal the tax this November.
No one likes to see their taxes go up. But the package store owners have a couple of particularly good reasons to be upset. First, they say the tax is duplicative: As much as 40 percent of what a consumer spends on a six-pack or a bottle of wine was already going to state and federal excise taxes.
Then they point to the border towns, where shoppers have yet another reason to go to sales-tax-free New Hampshire. Curtis says consumers who used to come from New York and Connecticut to buy alcohol here are now sticking to their home states.
The tax took effect in August, and many merchants are already seeing a decline in sales. George Haivanis, for example, says he often sees shoppers trade down to a less expensive wine at his stores, Wollaston Wines & Spirits in Quincy and Reservoir Wines & Spirits in Brighton.
Frank Anzalotti, executive director of the Massachusetts Package Stores Association, says he expects to meet with representatives from the beer and wine wholesaling industries next month to start planning their strategy. Anzalotti says he wouldn’t be as enthusiastic about the ballot question’s prospects if the Senate election had gone differently. “My gut tells me that was more than just a vote for Scott Brown or not a vote for Martha Coakley,” Anzalotti says. “There was a message being delivered there.”
Anzalotti and his colleagues first need to give the Legislature the option to repeal the tax. That’s not entirely an unreasonable request, even as Gov. Deval Patrick prods lawmakers to add the sales tax to candy and soda as well.
Sen. Michael Morrissey of Quincy, for one, would like to see the alcohol tax completely repealed. But Morrissey, co-chairman of the Legislature’s consumer protection committee, says lawmakers may propose a compromise that drops the sales tax but raises the excise tax to collect a similar amount.
That alternative is already being chided by some package store owners, partly because it could simply spur retailers to pass the charge on to consumers by raising prices.
Michael Widmer, president of the Massachusetts Taxpayers Foundation, says the Senate race shows that this is a favorable environment for any proposal that would cut consumers’ taxes. The seismic shift in attitude, Widmer says, has caught the attention of all the state’s political leaders. He says voters are clearly more angry now than they were a year ago, and would be more eager to vote for the tax repeal, even though it means giving up nearly $100 million a year in revenue for the state.
That’s not chump change. But there’s another ballot question this year that could punch a much bigger hole in the state budget by shaving the sales tax from 6.25 percent to 3 percent. Widmer estimates that could cost as much as $2.5 billion a year, or nearly 10 percent of the entire state budget.
That initiative is being pursued by a group led by Libertarian Carla Howell, who unsuccessfully pushed to abolish the state income tax in 2008. That campaign was easily outspent and outgunned by organized labor and business advocates. But Widmer says voters could be more receptive this time around to Howell’s more modest proposal, especially given the widespread anger that exists today.
If their past ballot campaigns are any indication, it’s likely that the alcohol tax repeal movement will be much better funded than the sales tax rollback effort.
But package store owners such as Rick Curtis don’t think it will take much money to persuade voters to go their way. Talk to Curtis about this issue for even just a few minutes and you can hear the frustration in his voice – a frustration that no doubt reflects voters’ sentiments across the state.
“We’re paying more than our fair share,” Curtis says. “Enough is enough.”
Jon Chesto is the business editor of The Patriot Ledger. He may be reached at email@example.com or at www.massmarketblog.com.