Maryland bill could slash spirits RTD tax
The Distilled Spirits Council of the US (Discus) has testified alongside Maryland distilleries in favour of a bill to cut the ‘discriminatory’ tax rate on spirits-based ready-to-drink (RTD) cocktails.
Discus, a trade body for the US spirits industry, voiced its support for House Bill 736 (HB 736) in front of the Maryland House Voice Ways and Means Committee yesterday (17 February).
HB 736 would establish a lower tax rate for RTD cocktails, which are currently taxed at a rate of US$1.50 per gallon for spirits-based products. The bill would cut the tax rate for this type of alcoholic beverage by 60% to US$0.60 per gallon.
In comparison, beer and malt-based products pay a tax of US$0.09 per gallon, while wine is taxed at US$0.40 per gallon.
Emily Smith, vice-president of state public policy for Discus, highlighted that the bill would “strengthen state revenues, support Maryland jobs and expand consumer choice”.
She continued: “There is no public policy rationale for maintaining policies that stifle innovation and prevent competition.”
Maryland is one of several states reconsidering tax rates on spirits-based RTDs to ensure parity and equal access for consumers, Discus said. To date, 25 states have already cut rates for lower-ABV spirits-based products.
Monica Pearce, co-founder of Tenth Ward Distilling Company in Frederick, told lawmakers that Maryland’s current tax structure puts small producers at a disadvantage in the RTD market.
“Today, spirits-based RTDs are taxed at a rate more than 17 times higher than beer- and malt-based products, despite having the same or lower alcohol by volume,” Pearce argued.
“Our RTDs range from 5% to 7.5% ABV, while many beers exceed 8% to 10% ABV and yet are taxed far less.”
Pearce also told policymakers the spirits sector has faced one of its “most economically challenging” years.
She added: “Consumer spending has slowed, costs of goods and labour have risen, and many craft producers across the state are struggling simply to stay open. Now more than ever, small businesses need relief – not barriers that make survival harder.”
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