At a time when most states are looking for the next big thing to slap a tax on, Massachusetts is looking to cut back on those extras. Beginning this weekend, the state is eliminating the state sales tax on alcohol.

Massachusetts imposed a sales tax of 6.25% on sales of alcohol, putting it pretty much on par with other states. However, it’s neighboring state of New Hampshire didn’t have the tax – and retailers felt that they were losing business. When the measure to eliminate the tax made it to the ballot, voters agreed.

Exempting booze from sales tax doesn’t make it tax free. Excise taxes imposed by the feds and the state didn’t go away: Massachusetts still imposes a $4.05 per gallon tax on spirits, a $.55 per gallon tax on table wine and an $.11 per gallon tax on beer.

How much is the repeal costing the state? It’s estimated that the sales tax on alcohol raised about $100 million annually. That money didn’t go into the general fund, however. It went to alcohol treatment programs. Supporters of the tax insist that money for treatment programs will now come out of the general fund. That’s not a popular option at a time when the state is facing a $1.5 billion deficit.

For now, however, the tax remains off the books. And how did citizens in Massachusetts celebrate? By having their own “tea party” of sorts – pouring booze into the harbor near the site of the original 1773 Boston Tea Party.

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Kelly Erb is a tax attorney, tax writer and podcaster.

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