On Wednesday, a Senate committee amended a tax package passed by the House earlier this week to hike alcohol taxes 5¢ per drink for beer, wine, and spirits, greater than the 1¢ to 2¢ increase included in the original proposal. The hike, larger than opponents had wanted but smaller than supporters had hoped for, would be the first in 30 years.
Research has shown that making alcohol costlier is a way to reduce excess drinking, and supporters argued that a significant tax increase is necessary to combat the state’s alcohol crisis. New Mexicans die of alcohol-related causes at nearly three times the national rate and alcohol is involved in more than twice the deaths statewide as are fentanyl, heroin, and methamphetamines combined.
New Mexico’s alcohol taxes do not adjust with inflation and have lost much of their real value since lawmakers last raised them. The 5¢ increase, approved by the Senate Tax, Business and Transportation committee, would bring taxes on wine and spirits back to the real value they had in 2000. Beer, which is currently taxed at about half the amount per serving as are wine and liquor, would face taxes of around a penny more in real value per drink than it did in 1994.
If passed, the nickel-per-drink hike would amount to a 74% tax rate increase for liquor, a 78% increase for wine, and a 129% increase for beer. Microbreweries and small wineries and distilleries would be exempt from the tax increase.
Whereas the current state alcohol excise tax raises about $50 million per year, the proposed levies could generate more than $95 million if New Mexicans continue to consume as much alcohol as they do now.
Like the House tax package, the Senate’s version would create an Alcohol Harms Alleviation Fund, to be used for treatment and prevention services. The Senate tax package would direct 46.5% of the alcohol tax revenues there — around $44 million. It reduces the share of alcohol tax revenues directed to the General Fund from 49.5% to 26.5% but the fund would continue to receive around $25 million because the increased tax rates would generate more revenue.
Wednesday’s hearing on the omnibus tax package was unscheduled and few members of the public were on-hand to offer comment. Brent Moore, a lobbyist for Anheuser Busch who gave the sole comment in opposition to the alcohol portion of the bill, said his employer was “in favor of responsible consumption” and argued that promoting that was “a better approach” than raising alcohol taxes.
Both supporters and those who would have liked a smaller increase were dismayed with the proposal.
During the hearing, Sen. Craig Brandt, R-Rio Rancho, said the nickel-per-drink tax hike was “a much larger increase than when I was involved with discussions.” He also expressed frustration that the bill didn’t direct the entirety of alcohol tax revenues to treatment and prevention, as the House tax package did. “None of it should be going to the General Fund.”
Sen. Antoinette Sedillo Lopez, D-Albuquerque, who sponsored a Senate bill that would have raised alcohol taxes to 25¢ per drink, said after Wednesday’s hearing she too was disappointed. “We had an opportunity to do something meaningful,” she said. “I hope we can revisit this issue in future sessions.”
Dr. David Jernigan, a professor at Boston University School of Public Health who advised advocates for a tax increase, estimated the Senate’s 5¢ hike on most alcoholic drinks would reduce drinking in New Mexico by about 1.8%. “Any increase in New Mexico’s alcohol taxes is long overdue and a good thing for public health,” he said, but “given the high rates of alcohol mortality in New Mexico, the state will need to do much more than this.”
The tax measure now heads to the Senate floor with three days left in the legislative session.