In the world of politics, there is an old saying: “Nothing is so permanent as a temporary government program.” For residents of the Keystone State, no phrase rings truer than when they walk into a Fine Wine & Good Spirits store.
As 2026 approaches, a nearly century-old “emergency” measure known as the Johnstown Flood Tax is once again making waves on news feeds. Despite being passed to provide one-time relief for a disaster that occurred in 1936, the tax remains a permanent fixture of Pennsylvania life, quietly siphoning hundreds of millions of dollars from residents’ pockets every year.
The “Emergency” of 1936
To understand the controversy, you have to go back to St. Patrick’s Day, 1936. Massive flooding devastated Johnstown, Pennsylvania, leaving thousands homeless and causing what would be billions of dollars in damage by today’s standards.
In response, the General Assembly passed an emergency 10% tax on all liquor sold in state stores. The promise was simple: the tax was a temporary measure to fund the cleanup and reconstruction of the city.
From Temporary to Permanent
The cleanup was completed within a few years, but the tax didn’t go away. Instead:
- 1939: The tax was made permanent.
- 1963: The rate was hiked to 15%.
- 1968: The rate was increased again to 18%, where it remains today.
Today, this “emergency” tax is applied to the net price of every bottle of liquor and wine sold in Pennsylvania. Because it is baked into the price before the 6% state sales tax is added (7% in Allegheny County and 8% in Philadelphia), Pennsylvanians are essentially paying a tax on a tax.
The “Pocketbook” Impact: Where Does the Money Go?
If you think this money is still going to Johnstown, think again. For decades, the revenue has been diverted directly into Pennsylvania’s General Fund.
- The Revenue: The tax generates roughly $400 million to $500 million per year.
- The Total: Since its inception, the “temporary” tax has collected an estimated $15 billion—far exceeding the cost of the original flood cleanup many times over.
- The Argument: Lawmakers often argue that the state is “addicted” to this revenue. Removing it would create a massive hole in the state budget that would likely have to be filled by raising income or property taxes.
The 2026 “Fairness” Debate
Why is this trending now? As Pennsylvania faces high inflation and rising costs of living, taxpayers are looking closer at their receipts. A recent report highlighted the absurdity of a 90-year “emergency,” sparking a new wave of calls for reform or elimination.
Opponents of the tax argue it makes Pennsylvania’s alcohol prices some of the highest in the nation, encouraging residents in border towns to flee to Delaware or New Jersey to make their purchases—taking their tax dollars with them.
Will It Ever Be Repealed?
While several bills have been introduced over the years to phase out the Johnstown Flood Tax, they rarely make it out of committee. For the state government, $500 million in “invisible” tax revenue is simply too hard to give up.
For now, every time you toast to a special occasion in Pennsylvania, you are also unknowingly toasting to the reconstruction of a city that was rebuilt before your grandparents were born.
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