How Will New Tax on Alcohol Affect Revenues?
As part of a package of sales tax changes that went into effect in 2009, Massachusetts’ general sales tax rate was raised from 5 percent to 6.25 percent and alcoholic beverages were made newly subject to the general sales tax. The most recent estimates from the Department of Revenue indicate that applying the general sales tax to alcoholic beverages resulted in an additional $93 million in tax revenue in FY 2010 and will produce an added $112 million in FY 2011.1 As a result of the 2009 tax law changes, alcoholic beverages now are subject to two types of taxes in Massachusetts: the general sales tax (discussed above) and a selective sales tax. The selective sales tax on alcoholic beverages was adopted in Massachusetts in 1933 – after the repeal of Prohibition – and, until 2009, was the only tax placed on alcoholic beverages.2 In FY 2009, the Commonwealth collected $72 million through the selective sales tax on alcoholic beverages.3 Historically, alcoholic beverage tax revenues have bee
