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Money fuels repeal of alcohol tax

Supporters raised more than 10 times the cash of opponents

Signs at Harrington Wine & Liquors in Chelmsford thanked voters for repealing the sales tax on alcohol. “Now we look forward to our customers coming back,’’ owner John Harrington said. Signs at Harrington Wine & Liquors in Chelmsford thanked voters for repealing the sales tax on alcohol. “Now we look forward to our customers coming back,’’ owner John Harrington said. (Ellen Harasimowicz for The Boston Globe)
By Jenn Abelson
Globe Staff / November 4, 2010

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It took more than $2 million, but Massachusetts consumers got it: cheaper beer.

The effort to repeal the state’s 6.25 percent sales tax on alcohol was the only ballot measure that prevailed in Tuesday’s election. The Vote Yes on One Committee, the campaign that was pushing the initiative, convinced communities across the state that eliminating the tax — in place for just over a year — would put more money in their pockets and help local liquor stores better compete with tax-free New Hampshire.

“I’m thrilled with the vote. We were losing 8 percent of our business,’’ said John Harrington, who put up thank-you signs yesterday at his store in Chelmsford, Harrington Wine & Liquors. “Now we look forward to our customers coming back.’’

The alcohol industry, which contributed the vast majority of the nearly $2.5 million to the Vote Yes on One Committee, far outspent the opposition. Beer giant Anheuser-Busch contributed $88,110, and the Beer Distributors of Massachusetts gave nearly $300,000.

The Committee Against Repeal of the Alcohol Tax didn’t even raise $200,000, according to the latest finance reports filed with the state.

“In ballot-question campaigns, it takes a big ad buy to get your message across,’’ said Jim McManus, a spokesman for the Committee Against Repeal of the Alcohol Tax. “All the winning ballot campaigns far outspent their opponents on aggressive TV ad buys.’’

It was a striking victory for the alcohol industry, with 52 percent of voters favoring the sales-tax repeal. The binding measure, which is set to take effect in January, restores the exemption that alcohol had long enjoyed.

Massachusetts lawmakers added the sales tax to alcohol for the first time last year, when it raised the state sales tax to 6.25 percent from 5 percent as a way to address significant budget shortfalls.

Local breweries, wholesalers, and liquor shops are hoping that removing the sales tax will mean customers will stop taking their business over the border and start buying more expensive alcohol. The New Hampshire Liquor Commission recently reported that sales topped half a billion dollars for the first time in 2010.

Those results included a 6 percent increase in retail-store sales and a 10 percent jump in profit from the previous fiscal year. Many of the Massachusetts communities bordering New Hampshire overwhelmingly backed the repeal.

Gerry Ryan of Chelsmford said he plans to do more of his alcohol shopping in Massachusetts once the state sales tax is eliminated, rather than driving 20 minutes to New Hampshire.

“We’ve certainly been taxed too much, and this hurts small businesses, and that’s the last thing I want to do,’’ said Ryan, who voted in favor of repealing the tax. “People go to New Hampshire to get a lower price. Now they won’t have to.’’

The New Hampshire Liquor Commission did not return calls seeking comment.

Liquor stores that are not on the border are also hoping the repeal results in more business. Consumers have been opting for lower-priced alcohol since the sales tax was added, said John Hafferty, managing partner of Bin Ends in Braintree.

“For the last year, the customer looking for a $20 bottle of wine, bought down to $18 and change — the net effect being a loss of business,’’ he said. “Going forward we expect that the customer shopping for a $20 bottle of wine purchases a $20 bottle. “

The pro-repeal campaign won over voters with funny, biting radio and TV ads that ran for more than two weeks, said Joe Baerlein, the Vote Yes on One Committee’s campaign strategist and president of Rasky Baerlein Strategic Communications.

One of the ads featured a cashier at a liquor store turning a customer upside down and emptying his pockets of change. The voice-over said: “With the economy upside down, the new sales tax on alcohol is more bad news for Massachusetts. . . . It’s just one tax too many.’’

Another commercial said customers are paying a double tax in Massachusetts because alcohol is subject to state and federal excise taxes. Those taxes are paid by wholesalers, but the cost is passed along to retailers and consumers.

“Consumers came to an understanding that this product had already been taxed,’’ said Frank Anzalotti, executive director of the Massachusetts Package Stores Association. “I think we were fortunate to be able to put together a campaign that could get the message out to voters.’’

Jenn Abelson can be reached at abelson@globe.com.

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