Sin tax to raise alcohol prices
December 7, 1990
It’s going to be more expensive to drink next year.
The Bureau of Alcohol, Tobacco and Firearms will be collecting a new floor tax on alcohol and cigarettes beginning Jan. 1, 1991. The new tax, commonly referred to as a “sin tax,” is designed to tax luxuries rather than necessities.
“It stinks,” said Glen Goering, owner of McCabe’s Lounge and Entertainment, 323 E. Lincoln.
“Where do we as citizens draw the line,” asked Goering. “The city raised taxes by 2 percent six months ago, and now the federal government is blanketing us again.”
The revenue created by the new tax is expected to be in excess of $340,000,000, said Hershal Steward, floor stock tax representative for the southwest region in Dallas, Texas. This figure will be increased in 1993, when cigarettes will be taxed again.
Cigarette prices are scheduled to rise by 15 cents per pack in 1991. In addition, a barrel of beer will be taxed $9 extra. Wine bottles will be taxed 90 cents more and distilled spirits will be taxed $1 per proof gallon.
Goering said he would like to know how Congress can tell the difference between luxuries and necessities.
Tavern owners say it seems inevitable that alcohol prices are going to rise as a result of the new tax. “Everyone is going to have to raise prices, the new tax is too high not to,” said Bob Daniels, owner of Otto’s, 118 E. Lincoln Hwy.
“Everyone in the industry is going to feel it”, said Lito Nedomachi, owner of The Jungle, 1027 W. Hillcrest Drive, who predicts a $2 rise in a case of beer as a result of the tax. He said the first four months are going to be the hardest on customers because the minimum wage doesn’t go up until April.
Although prices are going to rise, local tavern owners do not forecast drops in sales. “People are still going to drink, maybe just not as much,” Daniels said. Because the increase is consistent with the rest of the industry, he doesn’t anticipate added competition.
NIU students are equally skeptical. “I think the taxes are justifiable, but $2 a case is a little extreme,” said junior Eric Wright.