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Question 1: Repeal The State Alcohol Tax?

BOSTON (CBS) - Question 1 on the Nov. 2 state ballot asks voters if they want to repeal the 6.25 percent sales tax on alcohol.

A case of beer was a tax-free purchase until 14 months ago, when alcohol became subject to the state's sales tax.

Read: Question 1 Petition

Liquor store owners like James Katz of Brookline Liquor Mart say it's changed the customer's mindset, and his bottom line.

"Knowing that $14.99 is going to actually come out to 16 bucks is having a detrimental impact on our business."

His is in Brookline.  Store owners near the border of tax-free New Hampshire say the tax has really hurt them.  Opponents of the tax say it could translate to lost jobs.

The first month of the sales tax in August 2009 generated $8.7 million.   A year later that number jumped to $10.3 million, even with a sales tax holiday.  But the Department of Revenue says alcohol sales dipped about one percent over that first year.

According to the DOR, in fiscal year 2009, the alcohol sales tax generated $97 million.

"The revenues take care of so many people within our community," says Kevin Norton of CAB Recovery Services.

He points out the tens of millions generated by the alcohol sales tax help fund substance abuse treatment.  He says losing that would be devastating.

"I think we'd see lots of people who no longer had access to care.  Lots of people would end up either in ER's or jail."

But liquor store owners point out excise tax is built in to the cost of every bottle, so sales tax is a tax on a tax.

"If we're already paying excise taxes on the wine in the first place, why should there be an auxiliary tax?"

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