Don’t gouge buyers of spirits

Proposed draconian tax increase would drive customers out of state

The recent Journal editorial “Big tax hike puts a cork in microbrewery expansions” made a strong argument against raising taxes on producers of beer, wine and spirits. However, it is important to underscore just how dramatic a tax increase is being proposed and how it would impact local New Mexico businesses like mine.

Senate Bill 314 would raise the excise tax rate on distilled spirits to $7.24 per liter — more than a 350 percent increase. The average national excise tax on distilled spirits is $1.91 per liter, with the highest tax rate in states surrounding New Mexico tallying $1.47 per liter.

Under this legislation, my local distillery business would be devastated — I simply would not be able to compete with distillers in other surrounding states or big national brands. With the shelf price significantly cheaper in Texas, Arizona, Colorado and even Utah, consumers would be incentivized to cross the border to make spirits purchases out of state.

And the tax pain doesn’t stop there — the excise tax rate would increase to $7.76 per liter in 2021 and $8.40 per liter in 2025. And who knows what lawmakers will propose in another four years, eight years, etc.

Spirits, beer and wine already rank among the highest-taxed consumer items available today in the United States. Here in New Mexico, consumers pay an excise and sales tax at the federal, state and local levels, which accounts for more than half the shelf price for a bottle of spirits.

Raising these already extremely high taxes would not generate additional revenue; it will simply hurt the hospitality sector and small businesses.

It is easy to bill others when faced with tough budget decisions. However, this plan would ultimately hurt consumers, target local businesses and cost jobs. Lawmakers should reject it.