New Texas law may cause higher prices for mixed drinks

By: Steven Powell Email
By: Steven Powell Email

SHERMAN, TX -- Texas restaurant and bar owners with liquor licenses are clinking their glasses to a tax break in the new year.

Restaurant owners like TJ LaRosa, owner of Fulbeli's in Sherman, are excited about a new state law, that decreases the amount of taxes they'll pay to the state on cocktails.

"Normally in the restaurant business, the majority of money is made selling alcoholic beverages across the bar," he said. "It's going to affect us a lot actually. We're currently paying 14 percent on everything we sell."

That 14 percent is the amount restaurants and bars with liquor licenses already pay to the state under current law on each alcoholic drink they sell.

"If we sold a glass of wine, or a bottle of beer, or a cocktail, we paid 14 percent across the board, it didn't matter," LaRosa said.

House Bill 3572, which takes effect New Year's Day, will reduce the amount those businesses pay to 6.7 percent. But now the state will start taxing consumers 8.25 percent for liquor-based mixed drinks - which were previously untaxed.

LaRosa said he plans to re-examine his prices since the price of drinks was designed to accommodate the 14 percent tax his business was paying.

"Now we're able to make some changes. And hopefully it will be able to benefit not just the restaurant owners, but hopefully the customers as well," he said.

And that's the question all Texas restaurants that serve liquor now face - whether they will lower the cost of the drinks or pass the new tax on to consumers.

Some consumers we talked to are worried they'll shoulder more of the costs.

"I don't think it needs to go to the consumer. I think we pay enough as it is," Sherman resident Nancy Weatherlay said.

"If they knock off some price for the consumer, and the restaurants get their prices lowered, then I think it would be fair," Sherman resident Joanna Taylor said.

And with the new law, the state will receive an increase of .95 percent of the sale of each beverage.

The new law does not affect customers who dine at restaurants with a beer and wine only license.

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