There is a very lively discussion of the proposed fee increase in the federal beer tax going on in the blogosphere. Two places that have interesting discussions are Alan McLeod, at A Good Beer Blog, and Steve Sullivan, guest blogging yesterday on Kasper On Tap on the Baltimore Sun site. Sullivan provides a roundup of the current blogging on proposed increases in liquor taxes to finance health care reform. I have posted a bunch on this topic and my dissertation and a large part of my book dealt with the federal government and liquor taxes.
Last April I posted about a proposed increase in the Wisconsin beer tax. Many of the points are also relevant for the federal situation so I am re-posting it.
April 14, 2008
The website Wausau Daily Herald.com had a posting yesterday suggesting that Wisconsin raise its beer tax. Apparently the state is facing a rising problem of underage drinking and some legislators as well as police officers believe one response should be increased beer taxes. The state is also facing a budget deficit of $250 million.
Wisconsin has not increased the beer tax since 1969. It remains at six cents a gallon; the national average is twenty-six cents. During the forty years that the Wisconsin beer tax has remained stationary, tobacco taxes in the state have increased eight times. They are currently $1.77 a pack. Wisconsin ranks first both in percentage of high school students that drink and binge drinkers.
Given Wisconsin’s historical image as a center of brewing, the author of the posting suggested that, “Proposing a beer tax increase here is like suggesting higher tobacco taxes in North Carolina.” The author actually understates the potential opposition to a beer tax increase since he cites only Miller as a factor in the current Wisconsin brewing industry and claims primarily sentimental value for the industry today. However there are over fifty breweries and brew pubs in Wisconsin; several of which are among the top fifty brewers in the country. Miller Brewing is of course the country’s third largest brewers while Minhas Craft Brewery of Monroe, Wisconsin is fifteenth.
In 1991, when the brewing industry faced the first tax increase for beer in forty years, brewers large and small joined to fight the proposed increase. In fact most brewing industry organizations including the Beer Institute, the Brewers Association, and the National Beer Wholesalers Association maintain that tax should be rolled back.
Although craft brewing has a certain cachet that would imply it is something other than a business, craft brewers are no different from Anheuser-Busch, Miller, and Coors in seeking the least possible federal and state interference and regulation via taxation or other means. Given the poor economic landscape as well as the particular problems facing brewers such as the hops shortage, it is very likely that the brewing industry will argue against the tax as a regressive measure that would fall unfairly on middle class and working people. Because the brewing industry has always emphasized the heavy tax burden it already bears, it will argue that further taxes are not appropriate.
Increasing taxes to cover the societal costs of alcohol and abuse is something that the brewing industry has always rejected and will most probably continue to. It is very interesting that these arguments date back to the the beginning of federal taxation of beer and distilled spirits in 1862 and have not changed very much.