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Reduce or raise alcohol taxes? Economic Sustainability

In these tough economic times, taxation is a volatile topic. Raise taxes as the California Tax on Alcohol Initiative is proposing or reduce excise taxes to spur small business as the HR 4278 proposes?

Yesterday, California wine blogs like Fermentation: the Daily Wine Blog was up in arms about the new California initiative proposing

increasing the excise tax on each six-pack of beer from 11¢ to $6.08, on each 750 ml bottle of wine from 4¢ to $5.11, and on each 750 ml bottle of distilled spirits from 65¢ to $17.57.

I think many would agree with my thoughts that a more than 10,000% tax increase is not sustainable and would put most businesses out of business.  The question then goes to can we afford to reduce taxes?  Many economists say that we can and this video by Lazy Magnolia, a Mississippi microbrewery has a story and statistics to encourage people to support this bill.

According to an online article at Mutineer

“Harvard University’s John Friedman’s study, Economic Impact of Small Brewers Excise Tax Reduction (H.R. 4278) [PDF], reveals that H.R. 4278 would also help stimulate job creation quickly and at a low cost: The bill would generate more than 2,700 new jobs over the first year to 18 months, followed by an average of 375 new jobs per year over the following four years.”

I encourage you to download the Economic Impact Report and look it over.  That being said,  you know what they say about statistics and economic statistics based on the future can be some of the most slippery, even when compiled and reported by reputable sources. We just aren’t that good at predicting the future..  I really appreciated Kendal’s approach on his Washington Beer Blog,  he looked at past and current statistics on the post  How do you define a “small” brewery? His post swayed my decision. The fact is that the production levels for excise tax levels were set back in 1976, long before the microbrewery – craft brewery market came on the scene.  This legislation is aimed at leveling the playing field, to keep the smaller businesses competitive. Currently in Washington state, most of the breweries are microbreweries, producing less than Is it fair for Foggy Noggin, one of the smallest breweries in the world, to pay the same excise tax rates as the larger breweries? If you think the answer  to that question is No, then there are things that you can do.

Call to Action

Contact your US representative and request that they co-sponsor this billing. Jim McDermott is currently co-sponsoring the bill and earlier today Dave Reichert signed on as well.

The Brewers’ Association has a Call to Action page that includes information on how to contact your US Representative, talking points and sample letters.

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