• August 20, 2014

New state tax means hike in price of cocktails

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Posted: Friday, January 24, 2014 4:30 am

Consumers may be doing a double take when they go to pay their bar tabs at their favorite watering holes this year.

This year, 47 new Texas laws went into effect, including one that added an 8.25 percent tax to mixed beverages.

Until the law went into effect Jan. 1, consumers were only charged sales tax on beer and wine with restaurants picking up the tax bill on mixed drinks.

Restaurants now pay a lower mixed beverage tax — which dropped from 14 percent to 6.7 percent — and the state will collect an additional .95 percent on every drink.

The so-called “mixed beverage sales tax” stems from House Bill 3572, which supporters describe as an attempt to reduce hidden taxes and lessen the parity between businesses that sell only beer and wine and those that also sell liquor.

Some restaurant employees in Harker Heights fear the new tax will effect their wages.

“Bartenders’ tips just got cut in half,” said Dustin Dowell, general manager for Sports City Grill in Harker Heights. “They only make $2.13 an hour, which isn’t enough to pay the bills, so they rely heavily on those tips.”

Dowell said a good tipper, on average, will tip $1 per drink. Now with the added tax, that dollar is turning into change.

“So far, I can tell that our regulars are annoyed and irritated because they are used to coming in and paying a certain amount,” said Jessica Archondous, a bartender at Sports City Grill. “The first day we put the tax on checks it caught a lot of people off-guard.”

Archondous said she sees a difference in her cash out at the end of her shifts.

“A drink that used to cost $4, I’d usually make a dollar on,” she said. “Now that drink is $4.33 and I’ll make 67 cents.”

A fiscal analysis of the law predicted it would bring the state more than $21 million in new revenue during the 2014-2015 fiscal year. Cities and counties were expected to gain $6.1 million.

“These new laws are nickel and diming everyone,” said Wayne Young, co-owner of Red’s Corner Grill in Heights. “When it came into affect our patrons complained about it and asked about the change. Like everything else, people will just pay it and eventually they will forget about it.”

Businesses have several options for tackling the new law.

First, a business can combine the new and old taxes so drink prices stay roughly the same although customers would pick up the greater share of payments to the state. Second, a business could more easily raise drink prices by adding the sales tax on top of the existing price.

With already low drink prices, Young said they are just adding the tax to the total bill.

“There isn’t much we can do it about and we will just move along,” he said. “The people who will feel the affects are the bartenders. Right now it’s just nickels and dimes, but that will add up and that’s when they will feel the affects of the liquor tax.”

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