“Cheers” to Tax Equity; Senate Bill 331

By Evie Zois
Dykema

Along with “return on investment”, “dashboards”, and “relentless positivity”, “tax fairness” is one of the trendiest phrases to catch fire in state government in recent memory. This philosophy is one of the primary drivers shepherding Senate Bill 331 through the legislature. The bill, introduced by Senator Joe Hune (R-Fowlerville), proposes to amend the Michigan Liquor Control Code to eliminate a 1.85% tax on the retail sale price of spirits for off premises consumption.

The bill would effectively eliminate a 33 year tax inequity levied disproportionately between off-premises and on-premises establishments. Currently, the Michigan Liquor Control Code divides retail establishments into two distinct categories: retailers that are licensed to sell alcohol to consumers for consumption off-premises, i.e. grocery stores, local liquor/variety stores, compared to establishments licensed to sell alcohol to consumers for consumption while on their premises like bars and restaurants.

Since 1978, an additional 1.85% tax has been levied on each bottle of liquor establishments like grocery and variety stores sell to consumers (originally to fund treatment referral programs for individuals identified as publicly intoxicated). Senate Bill 331 proposes to eliminate the tax and equalize what many proponents believe has been an unfair taxing environment. Many in the legislature hope that the new savings generated by eliminating the tax will be passed onto consumers, particularly benefitting businesses near Michigan’s borders that compete with neighboring states.  The Michigan Business and Professional Association and the Michigan Food and Beverage Association have been publicly supportive of the legislation in both the House and Senate chambers.

The bill is currently on the House floor awaiting final action by the legislature.