[Congressional Record Volume 147, Number 57 (Tuesday, May 1, 2001)]
[Senate]
[Page S4117]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BAUCUS (for himself, Mr. Thompson, Mr. Craig, and Mr. 
        Burns):
  S. 808. A bill to amend the Internal Revenue Code of 1986 to repeal 
the occupational taxes relating to distilled spirits, wine, and beer; 
to the Committee on Finance.
  Mr. BAUCUS. Mr. President, it is with great pleasure that I join my 
good friend and colleague, Senator Fred Thompson, today in introducing 
legislation that will repeal the Special Occupational Tax, SOT, on 
taxpayers who manufacture, distribute, and sell alcoholic beverages. 
The special occupational tax is not a tax on alcoholic products but 
rather operates as a license fee on businesses. The tax is imposed on 
those engaged in the business of selling alcohol beverages. This is an 
inequitable tax that has outlived it's original purpose and is a clear 
example of an antiquated approach to federal taxation. Believe it or 
not, this tax was originally implemented to help finance the Civil War.
  The SOT on alcohol was dramatically increased during a budget process 
in 1988 and has unfairly burdened business owners across the country. 
From Thompson Falls to Sidney, from Chinook to Billings, small 
businesses are burdened with yet another tax in the form of the (SOT). 
According to the AFT, there are 480,427 locations nationwide that pay 
SOT's every year, including 458,603 retailers. These retail 
establishments account for $114 million out of $126 million in SOT 
revenues.
  In Montana, there are 3,378 locations, including 3,172 retail 
businesses, which pay more than $1 million dollars in the SOT every 
year. Seasonal resorts in Whitefish and Yellowstone, ``mom and pop'' 
convenience stores in Butte, and bowling alleys, flower shops, and 
restaurants across Montana and the United States pay the Federal 
government almost $100 million per year for the privilege of running 
businesses that sell beer, wine, or alcoholic beverages. For example, a 
small business owner in Helena, Montana runs several convenience stores 
and a few restaurants. The SOT for each establishment is $250. As a 
result, he pays $1750 a year in SOT payments that are in the nature of 
business license fees. In fact, a chain of four neighborhood food 
stores pays the same annual tax as the nation's largest single site 
brewery or distillery $1,000. This is not what Congress had in mind 150 
years ago, and I don't believe it is a situation we want today.
  Repeal of the SOT on alcohol is supported by a broad-based group of 
business organizations enjoys wide-spread bipartisan support on Capitol 
Hill. Similar legislation has been introduced in the House this year 
and bills have been considered in previous Congresses, but for one 
reason or another, the laws were not enacted. The GAO has examined the 
efficacy of the SOT several times and found it fundamental flawed. The 
staff of the Joint Committee on Taxation recommended in its recently 
released study on tax simplification that this special occupational tax 
be eliminated.
  It is time for us to move forward and enact legislation to repeal the 
SOT on alcohol. We urge our colleagues to join us in this endeavor.
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