Sin tax increases could hurt wallets, but unlikely to curb vices, Lawrencians say

In the town named the most hungover city in America this month by Business Insider, Gov. Sam Brownback’s proposal to raise taxes on alcohol and tobacco products would have little effect on vices, several residents said last week.

To deal with projected budget shortfalls of more than $710 million in the current budget and in the next fiscal year, Brownback proposes almost tripling the taxes on cigarette and tobacco products and raising the alcohol tax by 50 percent. Under his plan, the state is projected to raise $394 million over two years.

Kansas University juniors and former Free State High graduates Nathan Devin, left, and Zach Mehl, both of Lawrence, enjoy some happy hour beers at Merchants Pub and Plate, 746 Mass. St., Thursday, Jan. 22. Gov. Brownback has proposed a 4 percent hike in state taxes on liquor.

“It would hurt,” said Steven Berger, owner of Wine Cellar liquor store at 2100 W. 25th St.

“Everything would go up at least 4 percent for the customer, and that’s not any profit for us, that’s passed on to the state,” Berger said.

The current alcohol tax in Kansas is 8 percent. Brownback’s plan would increase it to 12 percent. At Berger’s store, where a 30-pack of Pabst Blue Ribbon cans costs $20 including tax, the new price would be about $20.75.

But while the tax increase might affect consumers’ wallets, Berger said he doesn’t see a price increase changing consumption.

“It’s like gasoline,” Berger said. “People will still drive when the prices go up.”

Geoff Deman, head of downtown brewing for Free State Brewery, said that if the tax proposal is passed, Free State will likely have to increase its prices.

Currently, a pint of Free State beer will set you back $4. A higher tax rate would be passed on to the consumer.

Kansas University student and Lawrence native Nathan Devin, 24, said if bars passed the cost onto their consumers, it wouldn’t affect his drinking habits too much. Devin said he enjoys the occasional beer when out with friends, but they plan their social outings around bars’ drink specials, such as those at Merchants Pub and Plate, 746 Massachusetts St.

“It would be a bummer if Merchants’ happy hour beers went from $2 to $3, but I can’t see that kind of jump,” Devin said.

With cigarette and tobacco prices tripling, perhaps the people most affected by the sin tax increases would be smokers, Low Cost Tobacco Mart employee James O’Kelly said. Brownback’s plan would raise the cigarette tax from 79 cents per pack to $2.29 per pack. Taxes on other tobacco products would go from 10 percent to 25 percent.

At O’Kelly’s workplace, 2104 W. 25th St., the most popular — and most expensive — cigarettes are regular Marlboros at $5.89 a pack with tax. Under the proposed increase, the pack would cost $7.39.

That price might inspire smokers to try a different cigarette brand or method of smoking, but O’Kelly said he didn’t think it would make people quit.

“Most of the smokers I’ve seen or heard of are in poverty themselves,” O’Kelly said. “Everybody is going to switch to the cheaper brands or roll their own.”

The frugal smoker might hop the border to purchase tobacco, O’Kelly said. In Missouri, the cigarette tax is 17 cents per pack.

Berger said the same concept applies to liquor stores. In Missouri, the state sales tax on alcohol is 4.23 percent.

“(The tax increase) would hurt especially on the state line,” Berger said. “When I managed a business in Kansas City, customers would go to Missouri for the lower prices over there.”

For that reason, and because he predicts consumers will begin purchasing cheaper booze, Berger said he doubted Brownback’s proposal would actually bring in the $394 million projected.

“The more you tax it, the less you’ll make in the long run because (customers) will price down,” Berger said. “In the end, I think taxes will stay stagnant.”