Average Price of Liquor Will Increase $1.50 With New Tax

The price of a fifth of gin and cher hard liquors will increase substantially today as the federal government increases the excise tax on liquor.

Many drinkers have been stocking up over the past week in preparation for the price hike.

Because of the tax, the price of the average one-liter bottle of hard liquor will rise by about one and a half dollars. The federal tax does not affect beer or wine.

Sales of liquor have been brisk this past week as consumers tried to stock their bars before price went up. Retailers and wholesalers, however, could not avoid the price increase as easily as their consumer. A one-time tax on liquor store inventories will be collected and prevent store owners from stockpiling.

Many retailers say that they expect to feel the impact of the tax immediately.

"We don't expect to have much business [today]," said John Terranova, a vice president at Martignetti Liquors of Brighton, a student favorite. "We hope we have [sold] enough yesterday to make up for today."

Lewis Keimach of United Liquors in West Roxbury estimates that liquor sales will be down 5 to 9 percent in the next six months. But others are not so worried. "After a while, it will be back to normal," said Terranova. "Things get forgotten and people get adjusted."

Liquor Slump

Hard liquor sales have declined 2 percent each of the last five years, according to Lisa Tate, a spokesman for a national organization for the liquor industry. She estimated that the new tax increase will help reduce sales an additional five percent in the coming year.

Tate attributes the industry's recent troubles mostly to the heavy state and federal taxes levied on liquor production and sales.

"Liquor already is the most highly taxed consumer product in the United States, more than cigarettes, more than gasoline," Tate said.

But some think the tax on liquor is too low. "Heavier taxes make heavy drinkers more responsible for what they do," said George Hacker, director of alcohol policies for the Center for Science in Public Interest, a non-profit health advocacy group.

Hacker says that the tax on spirits should be twice what it is now, and levies on beer and wine should be similarly increased. By doubling the tax, Hacker figures that alcohol-related problems, particularly lost productivity and increased health care costs, will decline by 15 percent and raise $12 billion for the U.S. Treasury.

The tax increase was passed by Congress as a part of the 1984 deficit-reduction package. The bill increased the excise tax on hard liquor from $10.5 to $12.5 per gallon of 100 proof spirit. The tax rate on particular liquors depends on their alcohol content or proof.

Federal tax on hard liquor in Massachusetts constitutes 24 percent of its price, while state tax adds 12 percent.