Tue December 31, 2013
Mixed Drinks Could Be Served With Higher Price, As New Texas Law Goes Into Effect
If you order a mixed drink in Texas tomorrow, you might see the price on your bill higher than what you’re used to. That’s because of a new state law that goes into effect on Jan. 1.
In Texas, if a bar sells you a mixed drink, it has to give 14 percent of what you pay back to the state. And that tax doesn’t show up on your receipt.
If the bar only sells beer and wine, it doesn't pay that tax. In that case the customer pays a sales tax of 8.25 percent. And that does show up on the receipt.
Tomorrow – on Jan. 1 – a new law goes into effect, which changes that.
"The Legislature restructured the mixed beverage tax to make it more transparent," says Richie Jackson, chief operating officer of the Texas Restaurant Association. "And to give a more level playing field between those who have a full bar selling mixed beverages and those who only sell beer and wine."
Starting Jan. 1, the hidden tax on that mixed drink is cut in half. It drops from 14 percent to 6.7 percent. And on top of that, the consumer will pay the same sales tax already being charged on beer and wine sales.
Michael Klein of the Texas Bar and Nightclub Alliance says the tax will make prices uneven and complicate transactions.
"Everyone already has their prices set based on what the market can tolerate. You can’t just raise your price by a dollar just so you can pass this on to the consumer," Klein says.
Klein also fears in the future, lawmakers facing state budget shortfalls will raise the mixed drink tax again, pushing it back up towards 14 percent.