At the latest Alcohol Task Force sub-committee excise taxes came up again as an issue. The lone public health person strongly encouraged the committee to think about raising the state excise tax on liquor which hasn’t been increased since the 1970’s. The business people strongly objected. I tried to make the point, using the federal tax structure as an example, that there could be a way to raise taxes but protect smaller producers. The craft brewer on the committee protested, saying “I pay the same as Anheuser Busch.” This is just not true.
Since 1976 small brewers have had a differential federal tax rate. The Beer Institute, the large brewers trade lobby, which is pushing the Craft Beverage Modernization and Tax Reform Act, legislation for tax relief, explains the tax structure:
“Existing federal excise taxes on beer are set at a rate of $18/barrel for brewers of more than 2 million barrels (62 million gallons, or the equivalent of 110 million six-packs) and all beer importers. Since the late 1970s, growth in the small brewing sector has been encouraged by tax credits offered to brewers which produce less than 2 million barrels, cutting their excise tax rate to $7/barrel on the first 60,000 barrels and allowing them a far lower overall effective tax rate on all barrels up to 2 million.”
The craft brewer was totally unaware of this. He apparently has software which calculates his tax rate and that is the extent of his knowledge about federal taxes. This points up a problem in messaging since both the Beer Institute and the Brewers Association, the craft brewers trade lobby, are pushing for taxes to be reduced. I am still of the opinion that they are very unlikely to succeed and the fact that brewers on the ground don’t even know it is an issue only strengths my position.