Tax on beer, liquor subject of Kansas Senate committee hearing

Today’s meeting of the Kansas Senate Assessment and Taxation Committee heard testimony on SB 569, which would increase taxes on beer, wine, and liquor. The tone of the meeting was set in chairman Les Donovan‘s opening remarks, when he said “If you drink, you’re going to have to pay.”

The fiscal note for this bill is not available at the legislature’s website, but Donovan said that he intends to moderate the tax so that it raises $30 million in revenue per year, down from the $80 million he said the bill would raise if left in its present form.

Advocates for the disabled presented both oral and written testimony in favor of the tax increase. Curiously, the school spending lobby, in the form of the Kansas Association of School Boards and the teachers union, did not speak.

There were a number of opponents. Testifying on behalf of the Distilled Spirits Council of the United States, Whitney Damron supplied these facts: 1) Of the purchase price of the typical bottle of spirits purchased in Kansas, 47% is a tax of some type. 2) The higher taxes in this bill are projected to reduce retail sales by $55 million, which would result in 800 jobs being lost. 3) Kansas taxes are higher than those in Missouri and Oklahoma, which lead to lost sales to those states. This bill would make this situation worse.

Ron Hein, testifying for the Kansas Restaurant and Hospitality Association, said that the businesses he represents are facing large increases in unemployment insurance taxes, and that the smoking ban will hurt, too.

In written testimony, Tom Palace of the Petroleum Marketers and Convenience Store Association of Kansas noted that the stores he represents are facing possible increases in cigarette and tobacco taxes, sales tax, gasoline tax, soda pop tax, and now beer tax.

The bill contains a provision that on July 1, a tax must be paid on the inventory of a distributor or retailer. In written testimony, a liquor store owner from Wichita said that his store would have to pay $5,000 in tax on that day.

Perhaps the most compelling testimony was offered by Marshall Rimann, who with his wife owns two liquor stores, one in Lenexa, the other in Prairie Village, which is right on the Kansas-Missouri border. He said that Kansas City, Missouri has much lower taxes on alcohol than Kansas.

As an example, he said that a 30-pack of Bud Light currently costs, with all taxes, $21.05 in his store. After the proposed tax increases, the price would be $23.49. Advertisements in the newspaper indicate that the same product can be purchased in Missouri for $19.33, including all taxes.

A bottle of wine that sells for $8 would have a price differential of almost $2, he said.

Surprisingly, some items can be purchased cheaper at retail in Missouri than they can be purchased from a Kansas wholesaler. A bottle of Seagrams 7 Crown that retails for $15.99 in Missouri costs $18.99 from a Kansas wholesaler, for example.

He said that the July 1 inventory tax for his store would be over $10,000.

Both Rimann and a liquor store owner from Eudora said that their customers tell them they often shop in Missouri because of the lower prices resulting from Missouri’s lower taxes.

In questioning, Kansas Senator Chris Steineger, a Democrat from Kansas City, said that in the business world, it’s not possible to raise prices in tough times. Instead, restructuring is required. He said he’s disappointed that the legislature is not restructuring government. “We didn’t consolidate any agencies, we didn’t close any programs — all we’re doing is just making people pay more.” There are other options, he said, and that is to restructure how the states does business.

Steineger also mentioned the two Quik-Trip convenience stores that moved from Kansas City, Kansas to Missouri because of taxes. One store moved just 100 feet, keeping the same driveway. You enter the store through a driveway located in Kansas, but by the time you walk in the store, you’re in Missouri. Kansas taxes are the reason for this.

In closing remarks, Donovan said that legislators “absolutely hate” to raise taxes, but that raising revenue is required at this time. He said the committee will take final action on this bill on Thursday.

9 Comments

  • They always go for the “sin taxes” (alcohol, cigarettes, sugary soda pop) because they believe that is where they will get the least resistance. Why don’t we jut downsize the State government? During hard time businesses in the private sector have to, why not the State?

  • They could certainly downsize state government instead of raising taxes. The Legislature and the Governor simply just don’t have the will to do it.

  • It’s pretty bad that the one thing (well at least the one legal thing) that can help us ease the misery of state oppression by the taxing legislature class is now even more expensive.

  • How about a legislative tax. For every percent they raise taxes on us they have to pay an extra 1% of their own. I’ll bet some of these all important projects would take on less significance then. I don’t care who’s paying it, we all pay it if one of us pays it. Enough is enough. If you don’t have the money you downsize, you don’t take some more.

  • I contacted the legislators about this and told them to vote no. It’s crazy how much they want to increase various taxes on Kansans right now. Bad at any time, but during a recession, insane. Hope the November elections put in some more true conservatives.

  • Americans for Prosperity–Kansas offers a commonsense proposed budget recommendation for 2011 that does not include revenue enhancement (tax increase) proposals as detailed in SB 569. Our state government has a spending problem that needs to be addressed and dealt with and solved without the need for tax increases of any kind. Please refer your legislators and friends to the Americans for Prosperity–Kansas web site for information on this commonsense budget proposal. “The FY 2011 Commonsense Budget Proposal reduces the State General Fund to $5.3 billion and leaves an ending balance of $187 million.”

  • Hi, While taxes are a “necessary evil” I believe that the idea of continually raising sin taxes is a step in the wrong direction.

    1. Sin taxes are a tax placed on retail items that are considered to be bad for us citizens. If no one drank, smoked, or ate fatty food wouldn’t it be WONDERFUL.
    2. Higher taxes lead to decreased consumption of the sinful item (in theory).
    3. The “guvmint” relies on these taxes to fund useful items (like roads) and to buy votes from various groups.
    4. Both the “guvmint” and the sinner are basically addicts and it seems that neither can quit.
    Conclusion, the “guvmint” depends on people buying more and more of the things that are bad for them (citizens) to continue to operate.

    Is this REALLY what we want to do?

    Mike

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