Alcohol, and beer in particular, has always had a target of sorts on its back. Historians note that the first records of taxes levied on beer date back all the way to the days of the Egyptians. German brewers in Hamburg were taxed so harshly in the 1600s that the number of breweries dwindled from over 1500 at the beginning of the century to only 120 by 1698. And, whoa be to the brewer who did not pay his taxes in Aix-la-Chapelle, France where the city council of 1271 mandated chopping off the brewer’s right hand should he fail to pay his taxes.
Yes, the taxman has not been kind to the poor brewer throughout history. And, in a startling case of history repeating itself, governments – local, state and national – have once again taken notice of the bustling beer industry and the tax dollars it can generate.
As it stands now, beer is federally taxed at $18 a barrel equating to about 58 cents per gallon according to the Boulder, Colo.-based Brewers Association craft beer industry group. Extrapolating that out even further; that 12-ounce bottle of beer you enjoy so very much is taxed about 5 cents by Uncle Sam. But, that rate only applies to the largest of breweries that produce more than 60,000 barrels of beer per 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 more than 5,000 breweries, every penny counts. And, that is just the feds. You might be appalled at what brewers have to pay in state excise taxes.
Florida is middle of the road with their tax on beer at 48 cents per gallon, but try to peddle beer in Tennessee and you will have to pony up $1.29 per gallon between state excise taxes and wholesale taxes. That is nearly a whopping $40 per 31-gallon half barrel. Compare that with Wisconsin where beer is taxed at a mere two cents per gallon.
Fortunately, there is a group in Washington that wants to see some of these taxes reduced on the federal side at least. The Beer Institute, an industry lobbying organization, and the Brewers Association rolled out the Craft Beverage Modernization and Tax Reform Act (CBMTRA). The goal of the act 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 less than two million barrels annually.
In a statement made after the bill was introduced, president and CEO of the Beer Institute 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% of the U.S. GDP.”
If passed, the legislation would represent a savings to America’s brewers of $131 million as estimated by the Brewers Association using 2015 figures.
While the federal bill will not affect how states levy taxes, it could provide a welcome respite to brewers besieged with taxes. But, in the end, 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 will depend on where you buy the beer you enjoy. And, I for one do not plan to stop enjoying a cold one because of a few pennies in taxes.