According to JR Palermo, the year was bad enough for restaurants, bars and diners.
He’s not too happy with a proposed 2 percent excise tax the state could impose on alcohol sales under a comprehensive law reforming the alcohol law.
Palermo, the owner of Tiny’s Restaurant & Lounge, which has been based in Santa Fe since 1950, is an outspoken critic of the efforts of the New Mexico legislature to revise the liquor licensing system, which many have described as outdated and expensive.
He said House Bill 255 was “not industry friendly”.
Among his many objections to the bill is a plan that will allow restaurateurs to acquire new licenses to serve spirits at a fraction of the cost paid by long-time business owners. The 2 percent tax would help pay the proposed tax breaks for licensees whose investments may be devalued.
The tax would increase by 12 cents on a $ 6 beer.
“Our customers are already struggling with what the pandemic brought with it,” said Palermo. “Customers only pay [the tax] and complain that I increased my prices. “
Rep. Antonio “Moe” Maestas, D-Albuquerque, argues the 2 percent tax is necessary to offset the losses to long-time liquor license holders who may have $ 350,000 or more on liquor sales in a state with a limited number of available licenses – assets that have been bought, sold, and leased like real estate. Legislation to revise the system and allow more restaurant owners to serve liquor in addition to beer and wine would offer restaurant owners with existing licenses up to $ 200,000 in tax breaks over a four-year period.
Alcohol licensed retailers would receive up to $ 100,000 in tax breaks over a four year period.
“We need to increase revenue to offset the tax withholding,” said Maestas, co-sponsor of HB-255. The bill works its way through the legislature – with a possible hearing of the Senate committee on Wednesday. “It is reasonable to make up for that deduction.”
But, Maestas said, some proponents of the bill are pushing for the tax to be cut.
Colin Keegan, owner of Santa Fe Spirits, would love to see this. “New Mexico has pretty high alcohol taxes in general,” said Keegan, who supports most of HB-255’s provisions.
“It’s a good thing to modernize alcohol laws,” he said.
Jeffrey Kaplan, owner of Rowley Farmhouse Ales, envisions customer confusion with multiple tax lines on one invoice.
“Customers will say, ‘What is this about?’ “Said Kaplan.
But he admitted that the tax would only be pennies on happy hour drinks, and “the high-end connoisseurs don’t care.”
“I don’t think it affects people who buy alcohol,” he added.
Senator Daniel Ivey-Soto, D-Albuquerque, a co-sponsor of HB-255, said he did not expect the tax to “roll back” the drink.
But he said, “I heard it caused some stress in people, so it’s something worth looking at.”
Dozens of business owners with liquor licenses have opposed legislation that would also allow the delivery of wine and beer when ordering restaurant meals. They say it would render their licenses – bank loan security assets and commercial mortgage assets – all but worthless.
The tax break was introduced to address these concerns. Legislators also included a provision that would allow any business owner who acquired a liquor license before June 30 of this year to waive the payment of annual license renewal fees.
Proponents said the legislation will reform a decades-old system where people who paid hundreds of thousands of dollars for liquor licenses years ago have a monopoly on the bar and restaurant business because newbies cannot afford to shop.
Over 710 restaurants in the state are licensed to serve alcohol. A similar number acquire annual licenses to serve beer and wine at a cost of approximately $ 1,000.
Rep. Rod Montoya, R-Farmington, another co-sponsor of the bill, said he thinks the 2 percent excise tax will be deemed unnecessary as the legislation makes its way through the Senate.
Other changes to the bill are likely too, he said Tuesday.
“I heard there were amendments,” said Montoya. “I don’t know how many, and I don’t expect them all to get through. But there was no desire to kill the bill from either party, as far as I can tell.”