Beer in the Time of Gonorrhea
In 1997, beer taxes added $25 billion to US government coffers. According to the Beer Institute, 80 cents of the cost of every six-pack of beer goes for taxes. Yet the federally funded Centers for Diseases Control and Prevention released a study in May 2000 that claimed raising the tax on a 6-pack of beer by 20 cents could reduce the incidence of gonorrhea by 9 percent (more drinking caused by cheap beer led to “risky sexual behavior” among young people, it said).
Hackles were raised throughout the beer industry. Earlier, a 1998 Florida State University study punctured the reduce-alcoholism-through-higher-taxes balloon of neo-prohibitionists by concluding that “higher taxes on alcohol do little or nothing to reduce deaths from drunk driving, because marketplace competition will always allow for a cheap drink somewhere, and consumers will find it.”
New Taxes, Old “Sin”
The national recession in the United States following the 2001 terrorist attacks has resulted in massive budget deficits in many states, and a new wave of “sin taxes” have been proposed on beer to balance the accounts. In Washington state, HB 1255, introduced in the state legislature on January 22, would increase the state’s excise tax on small brewers from $8.08 per barrel to $31.74—a hike of nearly 400 percent.
According to Washington Brewers Guild (WBG) president George Hancock, the bill could cause many craft brewers to go out of business, and raise the price of beer to consumers by over a dollar per pint. “This is no way to make public policy and an insult to those who are attempting to run businesses in the midst of the worst recession in recent history,” Hancock said. According to Hancock, small brewers create about 10 percent of the overall beer business in Washington, generate 20,000 jobs and a payroll of $364 million, pay $29 million in state taxes and $108 million in sales and other taxes.
As of this writing, the lobbying efforts of craft brewers in the state against the new tax appear to have paid off, since one of the bill’s sponsors has now suggested an exemption for small brewers. But the WBG also opposes raising the tax on large breweries, since its impact on the state’s overall beer business could be considerable.
Yet no matter what the rationale, a substantial new tax on beer or any attempt to tax beer on the same scale as spirits would likely affect what consumers see on the shelves in the future. An increase of seventy-five cents per pint or a dollar per six pack won’t keep consumers from buying beer. However, it will put an undue tax burden on the smallest brewers—those who are primarily responsible for most of the creativity in brewing in the past 25 years.
No Easier to Swallow
In the beer business, taxes, like marketing, are part of the brewing process. Beer taxes have supported the infrastructure of government almost as long as governments have existed. As we have seen, they have caused the alteration and even the virtual extinction of beer styles as well as the creation of new ones. Still, no matter how much taxes have had to do with the beer we drink, they never seem to go down easily.