Live in Washington and love to mix your own cocktails at home?
You’re paying $31.48 in taxes on every gallon of liquor you buy – that’s the highest in the country, according to national think-tank The Tax Foundation. The nationwide average? $7.63. The lowest? Two dollars per gallon in Missouri.
Why is our liquor tax so high? For starters, Washington state doesn’t have an income tax, says Brian Smith of the Liquor and Cannabis Board. “So we rely more heavily on other so-called ‘sin taxes’ that tax things like alcohol, cigarettes, and now marijuana, to bring in revenue,” he said.
But while we tax our spirits at $31.48 per gallon, we tax our wine at $0.87 per gallon (ranked 25th in the country) and our beer at $0.26 (ranked 24th in the country), according to the Tax Foundation.
Why the gap?
“There are theories,” said Steven Stone, president of the Washington Distillers Guild and founder of Sound Spirits. “Some people would say, for whatever reasons, spirits are more of a sin than beer and wine. Legislators might point out since liquor is stronger, it’s more dangerous and that’s why you need to tax it more.”
But he feels like it’s unequal treatment. Our state is known for its independent vineyards and breweries, and as of 2014, Seattle had more distilleries than any city in the country, with 17 licensed distilleries in its city limits, according to the Washington Distillers Guild. But the high taxation is taking a toll on those small, independent distilleries, Steven said.
Other reasons the tax is so high? Some point to the initiative that voters approved in 2011 that privatized liquor sales statewide, so the state’s Liquor Control Board would no longer oversee liquor stores. While the privatization did create an added fee, Washington state’s tax rate was still the highest in the country in 2011 at $26.70, before that initiative went into effect in 2012, according to the Tax Foundation.
Bottom line: Liquor is expensive in Washington. So what does that mean for you?
There are actually two kinds of taxes: a spirits sales tax and a spirits liter tax. The spirits sales tax is based on the selling price of spirits in the original package, according to the state’s Department of Revenue website. That’s 20.5 percent when you buy your bottle of gin from a store. When you buy a drink at a restaurant or bar, it’s 13.7 percent.
Then there’s another tax: the spirits liter tax. And that’s based on the volume of spirits being sold in the original package. That equals $3.7708 per liter. (And it’s slightly lower at $2.4408 per liter for restaurants and bars).
Here’s how the math works out for you (courtesy of this handy online calculator):
You buy a gallon of gin that is listed for $60. Then you pay the spirits sales tax of $12.30 and the liter tax of $13.20 for a grand total of $85.50. Eesh.
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