KU Statehouse Wire Service
As Kansas lawmakers continue to struggle with balancing the budget, a tax increase for alcohol might still be in play.
Facing a projected budget shortfalls of nearly $900 million through June 2018, Gov. Sam Brownback proposed a budget plan in January that included a 100 percent liquor sale tax increase, doubling it from 8 to 16 percent. While that budget was not approved, people involved in liquor sales are worried their industry could take a major hit if the budget crisis comes down to the last minute.
Executive Director of the Kansas Beer Wholesalers Association Jason Watkins said while most see a huge alcohol tax unlikely, legislators have not completely tabled the idea.
“We want to make sure we are there when they get to eleventh hour, they do not turn to alcohol taxes to find those extra dollars,” Watkins said.
Watkins is a creator of Ax the Tax, a campaign to advocate against the potential alcohol tax. Supporters of the movement include restaurants, bars and liquor stores across the state.
Members of the Ax the Tax campaign have created bar coasters that inform clients why the tax is harmful to the industry and how Kansans can let their legislators know they do not support it.
The group’s website allows people to send an email to their elected official asking them to vote no on a tax increase.
The website’s bio says doubling the liquor tax could cost hundreds of Kansas jobs.
However, state legislators and those working in the governor’s office said they are committed to fixing the budget deficit.
Brownback’s Communications Director Melika Willoughby said the proposed liquor tax increase would generate an estimated $52.3 million in additional funds.
“That revenue could be used to fund K-12, higher education and other core services of government,” Willoughby said.
Economist Chris Courtwright and Research Analyst Reed Holwegner from the Kansas Legislative Research Department put together research that breaks down Kansas’ current alcohol tax.
According to the report, Kansas has a three-part liquor tax: a liquor gallonage tax, a liquor enforcement or sales tax and a liquor drink tax. A gallonage tax is for those who manufacture or sell liquor. The enforcement tax is the sales tax to consumers by liquor and grocery stores. The drink tax charges based on the gross receipts from the sale of liquor by clubs, caterers, and drinking establishments.
Missouri has one excise tax. According to the IRS, excise taxes are paid when purchases are made on a specific good. Excise taxes are often included in the price of the product.
Liquor industry workers are worried how a potential increase in taxes will affect Kansas businesses and liquor stores.
According to Watkins, half of the state’s alcohol is sold within 50 miles from the Missouri border. He credits the high number mainly to the population size of the counties. In those areas, Watkins thinks an increased tax would not just hurt the liquor stores, but also businesses that don’t sell alcohol.
“[Customers] are just going to go across the border and buy their alcohol then they are going to go ahead and have dinner there and go their groceries,” Watkins said.
Watkins said it is important to keep alcohol at a fair price compared to Missouri, otherwise local stories and restaurants will take a hit.
“This is about keeping Kansas in a competitive market and keeping people going to Kansas businesses,” Watkins said.
Legislators budgeted for a 100-day session this spring, so they are hoping to fix the budget gap before that mark otherwise they will be sent into overtime.
Madison Coker is a University of Kansas junior studying journalism from Kansas City.
Kansas legislature considers possible alcohol tax increase