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Johnstown Tax?

Have you ever heard of the Johnstown Tax? Most Pennsylvanians probably have not. It’s an 18% tax that is buried in every purchase of wine or alcohol in the state. Every so often, when the debate begins on whether to privatize alcohol in the state, this buried tax comes up front and center. There are reasons on both sides of the fence regarding privatization. Bottom line is there are only 2 states where alcohol is controlled by the state – Utah and Pennsylvania.

But the Johnstown Tax is worth noting because it’s one of those ‘temporary’ taxes that are imposed for a ‘short time’, but never go away. It was implemented as a result of the 1936 Johnstown flood, the second of three major floods to hit this town. The initial tax was 10% on all wine and alcohol sales. It was raised to 15% in 1963 and again to 18% in 1968.

Estimates of flood damages were about $40 million. The city was refurbished by 1942. The temporary tax never went away and brings in more money each year as liquor sales rise. To date this tax has raised approximately $16 billion for the state – 72 years after its objective was reached.

So why hasn’t it been repealed? Great question, isn’t it.

Mark Schuster

September 1, 2014

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