Double Tax Threat Emerges

California craft brewers are facing an imminent and extremely serious threat to their businesses in the form of a double whammy; a proposed increase in the federal excise tax and an increase in the state excise tax.

Either of these tax increases could dramatically increase the price of any beer that you purchase.

The Senate Finance Committee in Washington, DC is currently considering a proposal to increase and equalize the excise tax for alcohol beverages as part of healthcare reform deliberations. This proposal would triple the excise tax for 4.5% ABV beer and impose even higher excise tax rates for higher ABV beers.

Meanwhile, here in California the state is considering a “fee” on beer (which would not require a 2/3 vote of approval by the legislature like a “tax” does).

Small brewers represent only 4% of the entire U.S. beer market by volume, with 95% of them being very small businesses (producing 15,000 barrels or less per year). Proposals to increase and equalize the tax among all types of alcohol will tax small brewers at the highest rates because our specialty, gourmet and innovative beers typically have higher alcohol contents. Brewers already pay a disproportionately higher share of taxes compared with other products – federal, state and local taxes represent over 40% of the retail price for beer while the same taxes equal nearly 24% of the price for all other purchases.

A $1 per case excise tax increase will typically cost the consumer at least $1.69 due to successive mark-ups as the case moves from brewer to wholesaler to retailer. Many small brewers are struggling to deal with the consequences of the 2008 spike in ingredient and operational costs.

You can help! Become a Beer Activist by joining the Support Your Local Brewery network. You will be notified via email when and how to voice your opinion to state and/or federal legislatures during critical threats to the craft brewing industry. Join now!