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ALEXANDRIA, Va. -- The National Association of Convenience Stores (NACS) was on Capital Hill this week urging Congress to repeal the Special Occupational Tax on Alcohol (SOT).
Steve Visocan, president of Helena, Mont.-based Pop Inn stores, told a Senate panel that the Civil War-era tax is unfair and burdensome to America's small retailers.
"With the economy slowly rebounding, small business owners need your help. Just as the tax rebate last year that put $300 in the pocket of every American was economic stimulus, so too is putting $250 back in the hands of small businesses around this country. Believe me, getting my SOT tax back would be welcome relief for me," said Visocan, who serves as treasurer and chairman-elect of NACS. His company owns three convenience stores and three taverns in Montana and has 76 employees. Visocan was invited to testify before the Senate Finance Committee by his Senator Max Baucus (D-Mont.), chairman of the Committee.
The SOT is imposed on all businesses that manufacture, distribute, or sell alcohol products. Liquor and beer retailers are charged a tax of $250 per store that sells alcohol, while wholesalers are charged $500 and producers $1,000.
"This tax was originally instituted in the 1860s to pay for the Civil War, and when Congress needed more money in 1986, they increased the tax 1,000 percent," said Visocan. "The Civil War has ended, and this tax needs to be repealed."
The way the SOT is applied, small businesses are hit the worst -- a chain of just four convenience stores pays $1,000, the same annual tax as the country's largest single-site brewery or distillery. "By the same token, a single Elks Lodge pays the same in tax per year as a single Wal-Mart Supercenter -- $250," said Visocan. "This just isn't fair." With over 90 percent of all SOT revenue coming from retailers, the tax hits convenience store and other small family retailers especially hard.
In his testimony before the Senate Finance Committee, Visocan also noted that a study released last year by the staff of the Joint Committee on Taxation called for elimination of the SOT, noting that the taxes retailers pay are not used directly to offset the cost of regulating the alcohol industry and that the tax represents a potential source of innocent noncompliance by taxpayers.
"SOT repeal is a top priority for both the National Association of Convenience Stores as well as the Montana Tavern Association," said Visocan "Being able to raise the awareness of this issue and having the Senate focus on this regressive and antiquated tax was of great importance to me."