ANNAPOLIS, March 19, 2002 – In testimony today before the Maryland House Ways and Means Committee, the Distilled Spirits Council strongly opposed a bill to double the state’s liquor tax to pay for illicit drug users or alcohol abusers, calling the legislation “unsound social and economic policy that will have a severe impact on the state’s hospitality and tourism industry.” The legislation, HB 607, calls for a 100 percent tax increase on distilled spirits, beer and wine products to pay for treatment for those who use illicit drugs or abuse alcohol. Under the legislation, Maryland’s current distilled spirits tax rate of $1.50/gallon would increase to $3/gallon. “This is a misguided attempt to solve a serious problem with an unfair solution,” said David Holliday, DISCUS Vice President, State Government Relations. “As an industry, we spend millions of dollars each year on programs to fight alcohol abuse. It is fundamentally unfair, however, to single out a responsible industry and its consumers to pay for problems created by illegal drug users.” Holliday pointed out that responsible Maryland consumers have already paid more than their fair share. When a typical bottle of spirits is purchased in Maryland, roughly half of the purchase price goes to a tax of some kind, making distilled spirits one of the state’s highest taxed consumer products. Economic studies show that additional tax increases will cause consumers to simply buy less or purchase their products at a lower price across state lines. According to an analysis of the legislation, the Council estimates spirits volume will fall by over 700,000 gallons – nearly 10 percent of total volume. Much of this volume will be lost to cross border competition since the proposed tax rate would be double that of neighboring Washington D.C. “Responsible consumption of distilled spirits, beer or wine is part of a normal, healthy adult lifestyle,” said Holliday. “According to government statistics, the vast majority of beverage alcohol consumers drink responsibly. Studies show that raising taxes does not deter abusers, they just penalize responsible Maryland drinkers.” Holliday stressed that the distilled spirits industry is committed to fighting all forms of alcohol abuse. Since 1991, The Century Council, a not-for-profit organization funded by the leading distillers has spent more than $100 million on programs to fight underage drinking and drunk driving, including programs that have been or are being used throughout Maryland such “Alcohol 101.” In addition, this past January, the Distilled Spirits Council provided a $20,000 grant to the United States Naval Academy to launch new alcohol abuse prevention programs at the Academy. “We agree that treatment and education are part of an effective solution, and it is for these reasons we are committed to public and private partnerships that will bring the results all of us seek.” The Distilled Spirits Council of the United States is the national trade association representing producers and marketers of distilled spirits sold in the United States. Located in Washington, D.C., the Council is led by Dr. Peter H. Cressy, the former Chancellor of UMass Dartmouth.