[Congressional Record (Bound Edition), Volume 149 (2003), Part 3]
[Extensions of Remarks]
[Page 4131]
[From the U.S. Government Publishing Office, www.gpo.gov]




          REPEAL OF THE SPECIAL OCCUPATIONAL TAXES ON ALCOHOL

                                 ______
                                 

                         HON. ROBERT T. MATSUI

                             of california

                    in the house of representatives

                      Thursday, February 13, 2003

  Mr. MATSUI. Mr. Speaker, it is with great pleasure that I join my 
good friend and colleague, Representative Dave Camp, 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. Believe it 
or not, this tax was originally implemented to help finance the Civil 
War. I began the fight to repeal this unfair tax back in 1992. This is 
an inequitable tax that has outlived its original purpose and is a 
clear example of an antiquated approach to federal taxation.
  The SOT on alcohol was dramatically increased during a budget process 
in 1986 and has unfairly burdened business owners across the country. 
Repealing the SOT would provide immediate and visible relief to 
thousands of small businesses in every congressional district. 
According to the ATF, there are 480,427 locations nationwide that pay 
this tax every year, including 458,603 retailers. These retail 
establishments account for $114 million out of $126 million in SOT 
revenues.
  In my district, repealing the SOT will save convenience stores 
approximately $50,750 annually. Repealing the SOT will save California 
wineries approximately $750,000 annually and California restaurants 
approximately $20 million annually.
  This tax is hardest on small businesses. A one-store operator pays 
the same SOT as a Wal-Mart Super center. 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 and enjoys widespread bipartisan support on 
Capitol Hill. Senators Max Baucus and Jim Bunning are introducing 
similar legislation in the Senate today. The Joint Committee on 
Taxation has examined the efficacy of the SOT several times and found 
it fundamentally flawed, and has recommended its repeal in its 2001 tax 
simplification report.
  With small businesses being hardest hit by the recent economic 
troubles, repeal of the SOT will provide much needed assistance to 
these important employers. 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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