Concern Coming To A Head Over Beer Taxes

Thursday, March 1, 2001

epartme! at ot the Treatuy ntornal Revenue Service Your name Jame p WANING 1998, ee ch t > a ri id Occupat ron in whic! bh eapenses wer TURE” ale? Concern Coming To A Head Over Beer Taxes (NAPS)—It’s said the only things certain in life are death and taxes, but few know that taxes on beer account for a whopping 43 percent of the price that consumerspayfor a cold six-pack. Like anyoneelse, beer drinkers say they’re willing to pay their fair share, but taxes on beer have become anything but fair. Fortunately, growing numbers in Con- gress have recognized it’s time to give beer drinkers a break and they’re pledging their support in efforts to reduce the federal excise tax on beer from $18 to $9 per barrel. So far, more than 120 members of Congress have joined with their colleagues to support a federal excise tax reduction on beer. “Reducing the federal excise tax on beer will continue to be a priority for us because it’s impor- tant to our beer consumers,” said Rich Keating, vice president and senior governmentaffairs officer for brewing giant AnheuserBusch. “Taxes on beer are just too high, and we’re encouraged that growing numbers in Congress see it exactly the same way.” While reducing beer taxes by $9 on a barrel of beer—a barrel is the equivalent of more than 330 cans or bottles—doesn’t soundlike a lot, this pocket change addsup quickly. For example, the average beer drinker pays more than $105 each year in beer excise taxes. Considering this same drinker earnsless than $45,000 in annual household income, lives in a modest home, has a couple of kids and manybills to pay, any extra taxes can hurt. But it’s also easy to see why government isn’t in a hurry to reduce excise taxes on beer. For example, total federal, state and local taxes on beer equals $8.4 billion per year. Given these high taxes, the government makes more moneyoff each barrel of beer than do brewers. In fact, each barrel of beer pro- The average beerdrinker pays more than $105 eachyear in beer related taxes. duces about $18 in tax revenue while brewers generally only make about $1 perbarrel. Some in government also argue high beer prices—caused by higher beer taxes—reduce alcohol abuse. But that argument doesn’t hold water. When faced with a price increase caused by higher taxes, alcohol abusers can simply switch to a less expensive brand or switch to cheaperalcoholic beverages. Furthermore, a recent study in the Journal of Health Economics confirmed this commonsensefact, finding that alcohol consumption levels of heavy drinkers are not influencedatall by price. Higher beer taxes only end up punishing responsible drinkers. Moderate drinkers—who account for nearly all of the 99 million American adults who drink beer— react to higher prices as most would expect: They cut back. Instead, higher beer taxes work just the opposite of how a fair tax should. They punish moderate drinkers and don’t affect consumption levels of alcohol abusers. Here’s what you can do about it. Pick up the phoneandcall your Congressional representative (202-224-3121 for the switchboard in Congress) or write them to urge them to support the rollback of excise taxes on beer.

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