The Herald Bulletin

Morning Update

Local Business

December 21, 2013

Alcohol tax hike may be tough to swallow

INDIANAPOLIS – A few extra pennies on a six-pack of beer could help Indiana counties afford addiction and mental health programs for low-level offenders, keeping them out of prison, in line with a law that goes into effect in July.

But the idea – floated by a group of prosecutors, public defenders, judges, police and prison officials – may fall flat in an election year when lawmakers loathe anything that whiffs of a tax increase, no matter how small.

“The general flavor of a tax increase prior to an election has little appeal and would meet with skepticism from both sides of the aisle,” said Rep. Tim Brown, R-Crawfordsville, chair of the House Ways & Means Committee.

A few years ago Brown proposed raising the alcohol tax by a few pennies to offset cuts in Medicaid payments to doctors and hospitals that treat the poor. His idea went nowhere, killed by opposition from the alcohol lobby and cries of unfairness from interest groups who wanted a cut of the revenues.

“It’s a lot more complicated than just saying, ‘We’ll put a nickel on alcohol and it all go to treatment,’” Brown said.

Indiana has some of the lowest alcohol taxes in the nation, according to the non-profit Tax Foundation. The beer tax is 12 cents per gallon, or about 7 cents on a six-pack. The liquor tax is $2.68 per gallon, and wine is 47 cents per gallon.

The alcohol taxes, mainly collected at the wholesale level, haven’t been raised since 1981.

That’s why a task force of criminal justice officials, appointed by a legislative committee, thinks a tax increase is worth discussing.

The group’s job over the past few months has been to raise ideas for how to reduce costs associated with the rewritten criminal code, scheduled to take effect July 1.

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