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Spirits run high among liquor entrepreneurs

Stores near the N.H. border expect a busy January following repeal of state alcohol sales tax

Leary’s Fine Wines and Spirits of Newburyport celebrates the end of the Massachusetts alcohol sales tax. Leary’s Fine Wines and Spirits of Newburyport celebrates the end of the Massachusetts alcohol sales tax. (Joanne Rathe/Globe Staff)
By Katie Johnston Chase
Globe Staff / January 5, 2011

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Massachusetts liquor store owners near the New Hampshire border are beginning the new year by celebrating the repeal of the state’s short-lived sales tax on alcohol that had been driving some of their regulars to buy spirits in the tax-free Granite State.

January is typically a slow month in the liquor business, but some Massachusetts store owners said they expect to be busier than usual because of the repeal of the 6.25 percent surcharge, which had been in place for less than a year and a half when residents voted in November to get rid of it last Saturday.

Not only will customers no longer have to cross the border to buy tax-free liquor, but stores are also hoping to grab business from people who have put off making big liquor purchases until after the tax was eliminated.

For instance, Jim Robinson, a regular at Harrington Wine & Liquors in Chelmsford, ran out of Hogue Chardonnay at the end of the year, but waited to buy another $100 case until he didn’t have to pay sales tax. Robinson continued to shop at Harrington’s while the sales tax was in effect, but when he wanted to buy in bulk, he would drive a few extra miles to the state liquor store in Nashua, or pick up wine at the Nashua Costco.

“Now if I have a big order and I’m entertaining, I’ll go to John’s,’’ said Robinson, 63, of North Chelmsford, referring to the liquor store owner.

And John Harrington is making sure his customers know about the change. His cashiers are using charts to tell each customer how much the tax would have been just a few days ago. “You just spent $45, hey you just saved $2.81,’’ Harrington said. “That registers to them.’’

When the sales tax took effect in August 2009, lawmakers promoted it as a way to raise additional revenue. But some residents simply crossed the border to buy their alcohol tax free.

The New Hampshire Liquor Commission, which runs all but a few liquor stores in the state, did not return calls seeking comment. The Country Mile in Greenville, N.H., an independent shop, declined to comment.

The Massachusetts Package Stores Association doesn’t track store sales, but executive director Frank Anzalotti said he’s heard of drops at liquor stores up to 30 percent when the sales tax was in effect. The repeal should do two things, Anzalotti said: bring business back to Massachusetts stores and keep more money in the pockets of consumers. “In these economic times, just reducing the amount by 6.25 percent, every little bit helps,’’ he said.

The state Department of Revenue reported that the amount collected from the alcohol excise tax was down almost $1 million in fiscal year 2010 from fiscal year 2009, ended on June 30, before the sales tax went into effect — a dip that could also be attributed to the economy, said spokesman Robert Bliss. That downward trend has reversed itself in the first five months of the 2011 fiscal year, which began in July, with the excise tax generating nearly $1 million more than it did in the first five months of 2010.

Officials have estimated that the repeal will cost the state more than $100 million.

Tina Messina is the co-owner of Wine Connextion in North Andover, about a 13-minute drive from the state liquor store in Salem, N.H. She estimates her business, which reopened as a specialty wine shop two months after the liquor tax took effect, would have had 25 percent more sales if not for the surcharge.

To raise awareness about the repeal, she is planning to hold a “New Hampshire price busters’’ promotion highlighting the bottles of wine she has that are less expensive than they are up north.

George Shube of Shubie’s in Marblehead, which sells alcohol, food, and housewares, said the best moment of his weekend was when he “clicked the taxes off the liquor department’’ on his computer. “I had people that would come in tell and me, ‘Yeah, I was up in New Hampshire last weekend and I picked up stuff.’ And those were just the people that admitted it to me,’’ said Shube, who is also having a wine sale this weekend to celebrate the end of the tax.

But some say it may be impossible to undo the damage the sales tax has done.

“My hope is that I’ll get 50 percent of the business back in the next six months,’’ said Todd Baltich, the owner of Leary’s Fine Wines and Spirits in Newburyport, who declined to reveal how much his revenues dropped last year. Baltich doesn’t expect to recoup it all, however, now that new patterns have been established: “People that never shopped in New Hampshire are shopping there now.’’

Katie Johnston Chase can be reached at johnstonchase@globe.com.