Kansas Association
of Beverage Retailers

 

 

 

 

Impact of 16% Liquor Enforcement Tax

27 Jan 2017 3:13 PM | Anonymous

According to the Department of Revenue budget proposal, raising the enforcement tax from 8% to 16% would generate an additional $52.3M in 2018. Current enforcement tax at 8% generated $67.8M in 2016.

It appears the Department of Revenue expects some slowing of sales due to the tax increase as revenue is not doubled from current collections. Instead of forecasting $67.8M in revenue doubles to $135.6M, they have forecast increased revenues of $120.1M ($67.8M current plus $52.3M forecast). To get $120.1M of revenue from a 16% tax would require gross sales of $750.6M.

 

Sales

Tax Rate

SGF

2016

$847.5M

8%

67.8

2018

750.6M

16%

120.1

(67.8+52.3 additional)

-94.9

+52.3

This forecast indicates a $94.9M reduction or (11.2%) in total alcohol sales. To get that extra $52.3M, Kansas retailers are being asked to absorb an 11.1% loss. Those retailers near the Missouri border the loss will be much greater. This is not a responsible fiscal policy.

This is a terrible proposal. Here are some of the key arguments to oppose it.

1. The Department of Revenue’s own numbers indicate Kansas would lose $95M in alcohol sales. This will hurt retailers, especially those near the Missouri border.

2. This will also have a negative impact on wholesalers of spirits, wine and beer who sell to those retailers.

3. It effectively raises the cost of goods sold to bars and restaurants by 8%. Raising drink prices will drive business to Missouri. This will also cause a reduction in the 10% drink tax.

4. It is a regressive tax hitting lower and middle class consumers particularly hard. A $6.99 six pack will have a tax of $1.12 or a tax of $4.48 for a case.

House Taxation Committee – Contact Amy at 785-969-1617 to submit testimony.  We will help facilitate.  Individuals who intend to testify must contact Lea Gerard, Committee Assistant–785-296-4830 and provide copies of testimony 24 hours in advance.

Meeting each day at 3:30 p.m. in room 346-S of the Kansas Statehouse  (Click here for list of committee members.)   Chair is Steven Johnson, Vice Chair Tom Phillips, and Ranking Minority Member Tom Sawyer.

Monday, January 30:   Informational hearing:  Sales Tax Exemptions Statutes: 3603(b), 3603(p), 3606(ee), 3606(t), 3606(hhhh), 3606(nn), 3603(s), 3606(i)    (Includes Lottery tickets and advertising)

Tuesday, January 31:   Public Input on Governor's proposals regarding raising cigarette tax, alcohol tax and potential motor fuel tax

Wednesday, February 1:   Informational briefing:  Taxation on Retirement Benefits

Thursday, February 2:  Discussion on: Changes to Income Tax Rates and Glide Path to Zero



Kansas Association of Beverage Retailers       P.O. Box 3842, Topeka, KS  66604      Email KABR  

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