Alcohol, particularly beer, has long had a target on its back. Historians note that the first records of taxes levied on beer date back all the way to the ancient Egyptians. German brewers in Hamburg were taxed so harshly in the 1600s that the number of breweries dwindled from more than 1,500 to only 120 by 1698. And, woe to the brewer who didn’t pay up in Aix-la-Chapelle, France, where the city council of 1271 mandated chopping off a brewer’s right hand for failing to pay taxes.
No, the taxman has not been kind to the poor brewer. And, in a case of history repeating itself, governments–local, state and national–have again aimed at the bustling beer industry.
As it stands, beer is federally taxed at $18/barrel, equating to about 58 cents per gallon, according to the Brewers Association. Extrapolating even further: That 12-ounce bottle of beer you enjoy so much is taxed about 5 cents by Uncle Sam. But that rate applies to only the largest breweries producing more than 60,000 barrels a year. Smaller breweries that produce less than 60,000 barrels–and the first 60,000 barrels produced by larger brewers–pony up just $7 per barrel, or about 2 cents per can or bottle. That may seem like a deal comparatively, but in a competitive market of 5,000-plus breweries, every penny counts. And that’s just the feds. You’d be appalled what brewers pay in state excise taxes.
Asking 48 cents a gallon, the state of Florida ranks ninth highest in beer taxes, but closer to the middle of the pack; in Tennessee, you’ll sacrifice $1.29 a gallon between state excise taxes and wholesale taxes. That’s nearly a whopping $40 per 31-gallon barrel! Contrast that with Wisconsin, where beer is taxed at a mere two cents per gallon.
Fortunately, there’s a group in Washington, D.C. wanting some of the federal taxes reduced. The Beer Institute, an industry lobbying organization, and the Brewers Association rolled out the Craft Beverage Modernization & Tax Reform Act. The measure’s goal is to reduce the federal excise tax on the first 60,000 barrels a brewery produces in a year, from $7 to $3.50, as long as the brewer produces fewer than two million barrels annually.
In a statement after the bill was introduced, Beer Institute President/CEO Jim McGreevy said, “Today the beer industry supports more than 1.75 million U.S. jobs and generates nearly $253 billion in economic activity, which is equal to about 1.5 percent of the U.S. GDP.”
Using Brewers Association’s 2015 figures, the legislation, if passed, would represent estimated savings of $131 million to America’s brewers.
While the federal bill won’t affect how states levy taxes, it could provide a welcome respite to brewers besieged with taxes. Still, short of a Boston Tea Party-style revolt, beer is going to be taxed. Whether the rate equates to an arm (or hand) and a leg depends on where you’re buying. But I, for one, do not plan to stop enjoying cold ones because of a few pennies.
Meet Marc at his V Pizza event.