Kansas Tax Increase in Alcohol

Kansas lawmakers trying to close a $467 million budget deficit weighed two tax increases, one on alcohol, and another on tobacco. One fared better than the other.

The proposed alcohol tax hike was tabled indefinitely by the House Tax Committee. But the idea is likely to resurface as lawmakers look for alternatives to further budget cuts. The added alcohol tax revenue would have been split between mental health programs and services for people with development disabilities.

But several members of the House Tax committee opposed the bill, HB 2593, for different reasons. Some worried it could hurt businesses that sell alcohol. Others questioned if the tax revenue would actually be spent on its intended purpose.

The bill would have doubled a wholesale tax on beer, wine and alcohol that’s been unchanged since 1977. The current tax is 18 cents per gallon of beer, 30 cents per gallon of wine and $2.50 per gallon of alcohol. The tax, amounting to a few pennies per drink, is passed on to the consumer. The increase would have raised $21.8 million a year.

Community mental health agencies have lost $20 million in state funding due to recent budget cuts. More than 4,000 Kansans with disabilities are now awaiting services.

Meanwhile, the Senate Tax Committee reviewed legislation to increase the tax on tobacco. A committee vote is likely next week. The tax would go up by 55 cents per pack of cigarettes to $1.34, the national average. The increase would raise $69 million.

Anti-tobacco groups argue that the measure, SB 516, would reduce smoking rates, especially among teenagers. They note the state already pays hundreds of millions to defray the cost of smoking related illnesses. School lobbyists and social service advocates contend the tax could help prevent further budget cuts.

But tobacco and convenience store owners maintain that increasing the tax would backfire. They argue that smokers near the state line would travel to Missouri, home of one of the nation’s lowest tobacco tax rates at 17 cents per pack.