Massachusetts Lawmakers Mull Doubling Alcohol Excise Tax Across All Categories

Massachusetts lawmakers are considering doubling the commonwealth’s excise tax on beer, wine and spirits.

The bill (H.2973) proposes increasing the state excise tax rate for malt beverages (including flavored malt beverages and sugar-based hard seltzers) from $3.30 per barrel to $6.60 per barrel. Excise tax on hard ciders between 3% and 6% ABV would increase from $0.03 per gallon to $0.06 per gallon.

Still wines’ tax rate would increase from $0.55 per gallon to $1.10 per gallon, and sparkling wines’ tax rate would increase from $0.70 per gallon to $1.40 per gallon.

Other alcoholic beverages with less than 15% ABV would increase from $1.10 per gallon to $2.20 per gallon. Beverage with alcohol content higher than 15% ABV would increase from $4.05 per gallon to $8.10 per gallon.

State Rep. Kay Khan, who proposed the bill, said during a public hearing on the bill that doubling alcohol excise tax rates would raise about $67 million for substance abuse treatment and prevention, according to a report from WHDH Channel 7 News.

Khan has introduced bills to raise the alcohol excise tax during each two-year session of the state Legislature since 2013.

In the hearing, Massachusetts Package Stores Association (MPSA) executive director Rob Mellion said increasing tax rates on alcoholic beverages in Massachusetts would push even more consumers over the state’s northern border to New Hampshire, which does not tax alcohol. About 28% of New Hampshire’s beverage alcohol sales come from discount-seeking Massachusetts residents, Mellion added.

Current loopholes allow third-party delivery platforms to purchase alcohol from other states and deliver to consumers in Massachusetts, skirting state taxes — a practice Mellion called “unpoliceable.” Raising the excise tax would only encourage the behavior and funnel businesses away from MPSA members, he said.

In addition to the excise tax bill, Khan has also introduced a bill that would establish a tiered tax system on beverages with sugar content greater than 7.5 grams per 12 oz. She estimated this would raise $368 million in funds that could be diverted to public programs on health and nutrition education and providing clean drinking water in schools.

Former Gov. Deval Patrick proposed a tax on sugary beverages on several occasions during his time in office, WHDH reported.

Earlier this year, Oregon considered raising its excise tax on malt beverages by $70 per barrel, to $72.60 per barrel, to fund behavioral health and substance abuse programs through the Oregon Health Authority. The proposal, which failed, would have made Oregon’s excise tax the highest in the country.