Right now, if you buy a glass of beer or wine or a mixed drink in a bar or restaurant, the sales tax on that purchase is 5 percent. A proposal to increase that tax to 6.25 percent is now in a legislative conference committee working on the FY10 state budget.
There is also a proposal in the conference committee to remove the tax exemption that currently exists on the sale of alcoholic beverages in package stores (Governor proposed it, Senate has approved, House has not approved). Massachusetts is one of a handful of states that do not currently levy a sales tax on alcoholic beverages sold in package stores.
As part of the discussion on whether to approve removal of this exemption, you may hear or read about a state alcohol excise tax that already exists on the sale of beer, wine and alcohol in package stores only. The excise tax is baked into the price and does not show up separately as a sales tax would on a package store sales receipt.
Here is a quick consumer guide to the state alcohol excise tax. Each bottle of beer sold in a package store is assessed 1-cent in excise tax, so the cost of a 6-pack includes a 6-cent excise tax while the cost of a case (24 cans or bottles) includes a 24-cent excise tax. A 750 ML bottle of wine includes an 11-cent excise tax; a bottle twice that size pays 22-cents. A 750 ML bottle of champagne pays 14-cents in excise tax. A liter of a distilled spirit that is less than 15 percent alcohol (such as Kahlua) pays 29-cents. Distilled spirits such as gin, vodka, bourbon or whiskey that do not exceed 50 percent alcohol pay $1.05 per liter.
The alcohol excise tax produced about $71 million in tax collections for the state’s general fund in the fiscal year that ended June 30, 2008, and is on track to generate about that same amount this fiscal year. Removing the sales tax exemption is estimated to generate $80 million to $100 million annually. In its approval the Senate said it wants to dedicate the new revenue to the treatment of addictions.
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As you’ve probably heard, DOR has a new electronic filing system—MassTaxConnect—coming to business taxpayers November 30th, 2015. We’ve blogged about MassTaxConnect before, including about the top 10 benefits business taxpayers can expect from the system as well as “What’s New” with the system compared to …Continue Reading Take a look under the hood: MassTaxConnect, DOR’s newest e-filing system
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