House measure would increase state liquor tax

Liquor could get more expensive this year now that a bill was introduced to impose a surcharge on the state’s liquor tax.

House Bill 771 proposes a 3-year-long increase to the state’s liquor tax, which currently imposes a nearly $6 tax per gallon on distilled spirits and a nearly $1 tax on nondraft beer.

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While the bill does not yet specify precisely how much the tax surcharge should be, it projects a 10 cent surcharge would generate $62.7 million in revenue for the state.

Ryan Kadota, owner of Kadota Liquor in Hilo, hadn’t heard about the bill before Wednesday, but said selling alcohol is already a difficult business in Hawaii thanks to high transport costs and taxes.

“Every year, we see cost increases from the distributors because of shipping costs going up and things like that,” Kadota said. “We already pay for a lot of regulatory things, too.”

Kadota said a 10 cent increase on alcohol would probably not hurt his business too much.

“Ten cents — it depends on the product,” Kadota said. “If you’re buying alcohol, I don’t think people are going to be too upset. If it was milk or fuel or something like that, I think people would start to get mad, but I think people are more flexible when it comes to buying alcohol.”

According to the text of the bill, a person who “excessively consumes alcohol” would pay an additional $27 per year if the surcharge were imposed, while a nonexcessive drinker would pay less than $5.

“Individuals who abstain from alcohol would pay nothing,” the bill helpfully adds.

A preface to the bill comments about the negative health and social impacts associated with excessive drinking, including increasing the risk of chronic diseases, dangerous accidents or violence. The bill says “excessive alcohol use shortened the lives of those who died in Hawaii by an average of 27.2 years.”

“Yeah, that’s always been a fair assessment, but there are still a lot of responsible adults who are able to consume alcohol responsibly,” Kadota said.

He added that he thinks a tax surcharge might go down smoother with consumers if a portion of the proceeds went into funds that would help support people recovering from alcoholism.

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However, the bill currently stipulates that the funds would simply go into the state’s general fund. Hawaii currently faces a $1.8 billion budget shortfall thanks to the COVID-19 pandemic.

Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.

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