On Saturday we reported that Washington lawmakers were considering an increase in beer taxation as a means to bridge the state’s budget gap. It was little more than a rumor at the time we reported it. Today the Associated Press confirmed that the state Senate has moved a budget-balancing plan over to the House of Representatives in the form of a new tax proposal that includes a significant increase to beer taxes.
The biggest portion of the new Senate Democratic plan raises $90 million by increasing the state sales tax to 6.6 percent from 6.5 percent, but another $58 million comes from an increase to beer taxes. The plan calls for a tax of 50 cents per gallon, which translates to about 43 cents per six-pack. Those numbers apply to the producer and not necessarily to the consumer. According to the A.P. report, “Microbrews, which have a strong following in Washington, would be exempt.”
My sources with the Washington Brewers Guild tell me that they are assuming the line would be drawn at 60,000 barrels produced per year. By definition, a brewery is considered a microbrewery if it produces less than than 60,000 barrels per year. This tax, however, would not be levied on the beer that a brewery produces.
The $58 million figure indicates that the tax would be applied to beer sales/shipments by breweries which not only produce, but ship, large quantities of beer. That means only the larger beer producers, or shippers, would be taxed, not our local, smaller craft breweries.
Of course, my interpretation of the situation is based on the limited information we have available at this point. I know that people in the craft beer business are worried and are opposed to beer tax increases like this whether they directly impact craft brewers or not.
On the surface, the fact that this tax increase does not apply to our beloved local craft brewers might seem like good news; however, taxes are a one way street. It’s a slippery slope, to use an outworn euphemism. At the very least, this increase makes it easier for them to justify any future beer tax increases. The craft beer industry may not be so lucky next time.
Because beer is discretionary spending, many people (including the governor) believe that this tax increase is worthy of consideration. What they fail to recognize is that beer drinkers already pay more than their share of taxes and further tax increases will negatively impact one of the only growing industries in the state.
You might think that brewers will simply pass the burden of tax increases on to the consumer, however beer drinkers have already been pushed to the brink. The breweries must consider the fact that some consumers might not be willing to swallow a 43 cent per six pack price increase right now and therefore the brewers will not risk pushing away consumers by increasing the purchase price. Likely, the breweries will have to absorb a significant portion of tax increase themselves.
The result is that these tax increases promise to hurt the beer industry. If you are a regular reader of this blog you know that the beer industry in Washington is growing. Jobs are being created. The beer industry should be fostered and not attacked.
Large breweries or small, a new tax on one is an attack on all.
Folks, it is time for us to unleash the hounds. We’ve got numbers, all we have to do is exercise our right to free speech. Please, please call or email your representatives in Olympia – click here to find your representative and send a message.
Be simple and direct. Tell them that you do not want them to increase any beer taxes. This tax increase harms the brewing industry, which is one of the only growth industries in the state right now. As consumers, we are already being asked to carry more than our share of the burden.