New Mexico has not raised its alcohol excise tax since 1993, but not for lack of trying. Numerous bills have been introduced over the last three decades, but none have been signed into law. Last year, an increase made it through the Roundhouse only to be vetoed by Gov. Michelle Lujan Grisham. This year, lawmakers in the state with the highest alcohol-related death rate in the country are giving it another go.
New Mexico has long struggled with residents dying from alcohol use and the issue is worsening, according toa recent legislative report. The alcohol-related death rate increased over 30% from just 2019 to 2021, when about six New Mexicans died each day from drinking.
House Bill 179 co-sponsor Rep. Joanne Ferrary (D-Doña Ana) told the House Health and Human Services Committee Monday that hiking the tax by 25 cents per serving could help change that.
“Other policy changes can be made too, but raising the liquor excise tax is the most immediate and effective solution we have to start saving the health and lives of our friends and family,” she said.
A legislative impact report estimates the tax could reduce consumption by 5%, though it didn't account for factors other than the price increase.
Current tax rates vary based on the type of alcohol, but the proposal would boost the beer tax over 650% and the wine tax over 375%. If the current rate had been adjusted for inflation, it would already be 73% higher than it is, according to the Legislative Finance Committee.
The current tax generates around $50 million in revenue. Bill sponsors estimate the rate increase could generate another $225 million on top of that. The bill would also adjust where that money goes. Right now, half of it benefits the state’s general fund. This proposal would instead put most of it in a new Alcohol Harms Alleviation Fund to support prevention and treatment. Co-sponsor Sen. Antoinette Sedillo Lopez (D-Bernalillo) said that could have a domino effect.
“We don’t have sufficient programs in New Mexico to deal with alcohol misuse,” she said. “And we are not going to move the needle on most of the social problems that we face in the state until we get a handle on the alcohol addiction and the other addictions that we have in this state. And good alcohol programs can also deal with other addictions.”
The remaining revenue would continue to go to the Local DWI Grant Fund and Drug Court Fund, though neither would see much of a bump from the increased rate.
The LFC estimates the bill could also save the state anywhere from $15 to $20 million in health care costs based on reduced alcohol consumption.
Critics, who included industry lobbyists and Republican committee members, argued at the hearing that the tax would penalize moderate drinkers and businesses. Several recommended keeping the tax rate the same while putting its revenue toward prevention and treatment, rather than the general fund.
The bill passed on a 6-3 party-line vote Monday. It heads next to the House Tax and Revenue Committee.
