Wednesday, February 4, 2009

Reduced Beer Tax?

Check this out.

Beer Tax reduction

I don't know if this is big news or not but if this is a part of the relief package it sounds good to me.

Those in the biz, let us know what you think. I am trying to get some more information on this.

The jest of it is they want to reduce the tax on beer to pre-1991 levels.

4 comments:

Richard Stueven said...

Tax relief is always a welcome subject, and the subject of rolling back the beer tax comes up just about every year. The major opposition comes from the liquor industry, who claim it's unfair that beer is taxed at a lower rate than liquor.

Until the details of this particular bill are posted, it's impossible to say what its effects will be. But if it's anything like the previous attempts, it's probably worth contacting your US Representative to ask him to co-sponsor the bill.

(For the record, the current federal excise tax on beer is $7.00 per barrel. Nebraska gets 30.69¢ per gallon, which would not be affected by this bill.)

beercellar said...

This proposal would mean that a brewery producing less than 2 million barrels per year would have their federal excise burden cut in half (from $7/bbl to $3.50/bbl).

I think the OP might be right that this isn't much more than a jest, regarding any implication it is providing needed relief.

I'm sure that breweries producing, say, 10,000bbl per year would enjoy their federal excise burden going from $7,000 to $3,500. That won't lead to lower beer prices for consumers, in any way (this works out to $.06 per 6-pack), and doesn't seem like a very significant impact on the bottom line at a small brewery. Still, every little bit helps.

For breweries producing over 2 million bbl/yr, their tax burden (based on 2mil bbl) would change from $36 million to $18 million. I'm sure those breweries could use another few million to pump into their advertising budgets or bonus schedules. Average cost for a 30-second commercial during the super-bowl this year was $3 million, just for the 30 seconds air-time, not including the production cost of the commercial itself.

I think there are much more pressing uses for our elected officials' time than this.

beercellar said...

I guess I can't edit my comment...but clearly I did some bad math there...

A 10,000bbl/yr brewery would see its federal excise burden go from $70,000 to $35,000 per year with a halving of the tax rate.

That does seem like it would make a significant impact on a brewery's bottom line. It still won't affect consumer prices much or at all, but would leave breweries with a little more cash to invest in equipment, employees, employee benefits, or marketing.

Richard Stueven said...

The Brewers Association has posted an Excise Tax Resources page at http://www.beertown.org/craftbrewing/govt_affairs/excise_tax.html.

beercellar makes an important point in the previous comment: reducing the tax will free up money for brewers to invest in new equipment, new personnel, and increased production. The government will actually see an increase in revenues if the excise rate drops.

(Here at Gottberg, we would have saved only $627, so it's really not that big a deal for us. But it's huge for the craft brewing industry as a whole.)