Brookston Beer Bulletin

Jay R. Brooks on Beer

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Beer In Ads #1295: Bill For Taxes

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Wednesday’s ad is another one from the United Brewers Industrial Foundation, also from 1939. This was well before the “Beer Belongs” series, and just before World War II. Showing a simple bill template, with a lot of negative space for impact, makes the point just a few years after prohibition ended, that beer was providing quite a lot of money into the economy, over one million dollars each day. According to the CPI Inflation Calculator, $1 million in 1939 would be $17,140,287.77 in today’s money.

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Beer In Ads #1281: How Much Does The Brewing Industry Pay In State Excise Taxes?

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Wednesday’s ad is another one from the United States Brewers Foundation, this time from 1951. It’s another ad reminding people, with Prohibition less than two decades in the rearview mirror, that the brewing industry contributes quite a bit to the economy. In this case, the figure is $193 million for state excise taxes from the previous year, 1950, so really that’s just a small part of what the industry contributed to the economy, because it doesn’t include federal excise taxes, or any additional taxes levied on all businesses plus the special taxes reserved for alcohol companies. You just know today that the amount is exponentially higher.

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Beer Excise Tax Rates by State, 2014

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The last time I saw the Tax Foundation look at beer excise taxes was in 2009, but recently they updated their map of Beer Excise Tax Rates by State, for 2014, taking into account several states who changed their rates over that time.

Tax treatment of beer varies widely across the U.S., ranging from a low of $0.02 per gallon in Wyoming to a high of $1.17 per gallon in Tennessee. Check out today’s map below to see where your state lies on the beer tax spectrum.

A few state rates changed since we released last year’s data. Namely, North Carolina’s tax per gallon increased by nine cents, and there were slight increases in Arkansas (+2 cents), Kentucky (+2 cents), and Washington, D.C. (+2 cents). Washington’s tax decreased by 50 cents, and Minnesota’s number was one cent lower than last year. (See the 2013 edition of our Facts & Figures booklet for last year’s numbers.)

There isn’t much consistency on how state and local governments tax beer. This rate can include fixed-rate per volume taxes; wholesale taxes that are usually a percentage of the value of the product; distributor taxes (usually structured as license fees but are usually a percentage of revenues); retail taxes, in which retailers owe an extra percentage of revenues; case or bottle fees (which can vary based on size of container); and additional sales taxes (note that this measure does not include general sales tax, only those in excess of the general rate).

The Beer Institute points out that “taxes are the single most expensive ingredient in beer, costing more than labor and raw materials combined.” They cite an economic analysis that found “if all the taxes levied on the production, distribution, and retailing of beer are added up, they amount to more than 40% of the retail price” (note that this may include general sales tax and federal beer taxes, which are not included in the estimates displayed on the map). Last year, we did a podcast with Lester Jones, Chief Economist at the Beer Institute on tax treatment of beer, which is worth a listen.

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British Beer Sales Up Two Consecutive Quarters

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Given that craft beer on this side of the pond has seen double-digit growth almost every year for over ten years, the news that sales of beer in Great Britain has shown positive growth in two consecutive quarters may not not seem like something that’s newsworthy. But this is the first time it’s happened in more than ten years, as pub closures and other factors have had troubling consequences for British beer. The latest figures, released by the British Beer & Pub Association (BBPA), show total beer sales up 0.8% in the 4th quarter of 2013, with off-trade (primarily retail) up 3.9%, although pub sales were down 2.2%.

The Morning Advertiser article also mentions the announcement concurrently that Marston’s will build a new £7 million bottling plant, which the BBPA believes translates to increased confidence on the part of British brewers. The credit for all this good news is thought to be the decision by the UK government’s Chancellor to “cut [the] Beer Duty in last year’s Budget,” meaning lower taxes on breweries. According to the BBPA’s Chief Executive, Brigid Simmonds. “These figures demonstrate that cutting beer duty helps increase beer sales, stimulates industry investment and saves jobs. We hope the Chancellor takes note and freezes beer duty in his next Budget to give a further boost to British beer and pubs.”

This is important on our side of the world because there are currently two bills before Congress with the same goal, to lower the excise tax of beer to stimulate our economy and create jobs in the brewing industry and related support industries here, too. That it appears to have worked in Great Britain is a promising development that may make it more attractive to legislators in justifying the tax cut.

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Federal Beer Tax Bills Compared

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Motley Fool has an interesting overview and comparison of the two bills regarding the restructuring of federal beer excise taxes currently before Congress, and likely to be resolved this year. The two bills, known as the BEER Act and the Small Brew Act (which Motley Fool calls the “Small Beer Act”), are both designed to reduce federal excise taxes, but in different ways, benefitting different size breweries differently. Which bill, if any, will pass is anybody’s guess at this point, but check out Beer May Be In For a Tax Break — Why This Could Be Bad for Some Brewers for one financial website’s take on them.

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How Much Does The Government Make From Alcohol?

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Today’s infographic shows How Much Does The Government Make From Alcohol? It was created by Inuit, the makers of Turbo Tax. It “illustrates how much money individuals are being taxed to consume alcohol, and subsequently how much the Federal and State governments are generating in tax revenue. There is also a breakdown of how different types of alcohols are taxed in the various states, as well as international comparisons — to put thing in perspective.”

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Click here to see the infographic full size.

State Beer Excise Tax Rates

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Today’s infographic is a map of the State Beer Excise Tax Rates for each of the fifty states as of January 1, 2013. It was created by the Tax Foundation as one of their weekly maps. It’s just the state excise taxes brewers must pay, and doesn’t include either federal excise taxes or any local excise taxes. Tennessee has the highest state excise taxes and Wyoming has the lowest, a fact that the anti-alcohol folks like to exploit and whine about as often as they can whenever these maps show up online, never discussing context or the total taxes each state brewer pays. Not surprisingly, since oftentimes these are also referred to as sin taxes, six out of the highest ten states are in the south, with Florida at #11 and Mississippi at #13. California’s near the middle.

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Click here to see the map full size.