The head of the state liquor commission said Tuesday lawmakers shouldn't raise taxes on liquor next year to help balance the budget.
"We already have a high tax rate on alcohol," said Sam Granato, chairman of the Department of Alcoholic Beverage Control Commission.
Utah's government-controlled liquor sales already pump about $100 million annually into state and local coffers, Granato said. That includes $26 million for school lunches and about $60 million in profits that went to the state's general fund, in addition to sales taxes.
"That's not too bad, is it," Granato said, adding he was opposed to boosting the markup on the liquor, wine and higher alcohol content beer available only through state-run stores and package agencies.
"That's called greed," he said of seeking more cash from drinkers. "Why should we penalize them?"
Utahns currently pay an 86 percent markup on wine and liquor, and a 64.5 percent markup on beer with more than 3.2 percent alcohol content, plus state and local sales taxes.
But some lawmakers are looking at increasing liquor costs as one of the ways to help close a looming shortfall in the budget year that begins July 1, 2010.
There are no specifics being discussed yet, although legislative leaders have told the Deseret News they expect to raise a number of taxes by $100 million.
Those taxes would include alcohol as well as the tobacco tax, now just under 70 cents on a pack of cigarettes. Raising the tobacco tax to $1.31 a pack would generate another $30 million. To come up with that much from alcohol sales would mean hiking prices by about one-third.
Granato, who is running as a Democrat for the U.S. Senate, isn't the only one opposed to that idea. So are representatives of the state's bars and restaurants.
"It's too easy to look at 'sin taxes' every time there's a budget shortfall," said Lisa Marcy, spokeswoman for the Utah Hospitality Association. "All of us need to share the burden of solving the problem. What they're doing is putting the burden on the backs of a small number of us."
And the Utah Restaurant Association's Melva Sine said restaurants would have to pass along the increased cost of alcohol to customers, which would hurt business. In Utah, restaurants pay the state the same price for alcohol as everyone else.
"A tax increase piled on top of the taxes that already exist — we're reaching a level where there's concern out there that sales will drop, and not just on alcohol," Sine said. A national study, she said, showed that restaurants lose at least five customers a week for every percent that prices are increased.
The concern over the possibility of an increase in alcohol tax comes at the same time Granato and others are trying to get lawmakers to do away with liquor license quotas.
The state is running out of liquor licenses, which are limited according to a population-based formula set by the Legislature. Sine said the restaurant association is calling for an end to quotas on full service restaurant licenses as well as those limiting sales to beer and wine.
Senate President Michael Waddoups, R-Taylorsville, has suggested if lawmakers agree to re-examine the quota system, an increase in alcohol taxes would also have to be on the table.
Just last year, lawmakers did away with private club membership requirements, the most sweeping change in state liquor laws in decades. Marcy said the talk now of raising taxes is retaliatory.
"It sends a message that if you're going to push for change, you're going to pay one way or the other," she said.
e-mail: lisa@desnews.com