News Beer Institute: Most Expensive Ingredient in Beer is Taxes

Discussion in 'Beer News & Releases' started by yemenmocha, Sep 28, 2012.

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  1. yemenmocha

    yemenmocha Poo-Bah (2,459) Jun 18, 2002 Arizona

    Seems like a lot of skeptical people on this topic when it comes up in the forums. Glad it is in the news and receiving some attention.
  2. sjstraub

    sjstraub Disciple (311) Nov 13, 2006 Wisconsin
    Beer Trader

    As well it should be. It's an unhealthy luxury good. Beer, cigarettes, liquor, candy, soda, etc should all be taxed to high hell. Think about it this way, would you lower the beer tax to increase the tax on milk? Nope. That would be insanity.
    RyanMM, JimKal, tronester and 4 others like this.
  3. herrburgess

    herrburgess Meyvn (1,035) Nov 4, 2009 South Carolina
    Industry Beer Trader

    It's the first thing you hear when you ask how German beer can remain so inexpensive: they tax it at a far lower rate than the (puritanical) U.S.A.
    cavedave and yemenmocha like this.
  4. UCLABrewN84

    UCLABrewN84 Poo-Bah (12,229) Mar 18, 2010 California

  5. luwak

    luwak Aspirant (269) Mar 2, 2010 Arizona
    Beer Trader

    WORD. I'd gladly pay more taxes on my unneeded items like beer to free up sources for incentives for those who produce needed goods.
    RyanMM likes this.
  6. emannths

    emannths Initiate (194) Sep 21, 2007 Massachusetts

    The excise tax applied to beer is minuscule. The analysis includes sales taxes and business taxes which apply to all business, whether they sell beer or teddy bears, and amounts to at least 75% of the taxes in question.

    I'd think the Beer Institute's lobbying dollars would be more effectively spent on reducing the red tape and bureaucracy that do relatively little to protect the public, yet are the cause of massive headaches for people in the industry and a reduction of consumer choice. But of course, once you're on the right side of the red tape, you've got a lot less incentive to lobby against it.

    Oh, how about the bomber tax? Does that count? Their analysis assumes $0.09/oz, or about $2/bomber. So if you include the bomber tax that makes the bottle $8, then taxes are a HUGE part of the equation. :wink:
  7. Bond111

    Bond111 Aspirant (228) Feb 14, 2011 Minnesota
    Beer Trader

    Here in Rochester Minnesota, tax on beer/booze is 9.875%. I understand cigarettes because they are dumb, but the nectar of the gods?!?
    afrokaze likes this.
  8. jesskidden

    jesskidden Meyvn (1,305) Aug 10, 2005 New Jersey

    For some examples re: emannths point, on a 12 oz. bottle of beer from a smaller "craft" brewery (under 60,000 bbl./yr), the Federal Excise Tax accounts for 2¢ (and that's rounded up, based on the reduced rate of $7/bbl.) of the price.

    State beer excise beer taxes vary quite a bit but in most cases it still only adds a few cents per bottle - Alaska's is highest (over a $1/gallon) and costs around a dime per 12 ounce.
    Kuemmelbrau, Blanco and drabmuh like this.
  9. dgilks

    dgilks Initiate (0) Jul 14, 2008 Australia

    Alcohol taxes in the US are so obscenely low it isn't funny. We pay close to $1 in excise on a 12oz bottle here in Australia compared to your 2c.
  10. n2185

    n2185 Poo-Bah (1,862) Apr 14, 2008 North Carolina
    Beer Trader

    I don't really mind since those roads that are used to get both the beer and myself to the stores, bars, and breweries won't pay for themselves.
  11. jesskidden

    jesskidden Meyvn (1,305) Aug 10, 2005 New Jersey

    Well, now, to be fair that 2¢/12 oz. bottle figure is only for breweries under 60k bbl/yr- over that, it jumps up to a nickel a bottle/can! :grimacing:
    Boz12 and drabmuh like this.
  12. DonDirkA

    DonDirkA Initiate (0) Dec 14, 2011 Arizona

    I would increase the tax on milk to lower the beer tax. But I'm lactose intolerant, so I don't really give a damn :slight_smile:
    5thOhio likes this.
  13. DonDirkA

    DonDirkA Initiate (0) Dec 14, 2011 Arizona

    I lived in Flagstaff, AZ and I am from Tucson, AZ. AZ state sales tax is now 9.1% on anything. Flagstaff tax on booze, restaurants and hotels is something like 10.8% if I remember correctly. So my $20 bomber would cost over $2 extra :slight_frown:
  14. dauss

    dauss Zealot (552) Aug 9, 2003 Colorado
    Industry Beer Trader

    Meh. The tax rate here is comparatively low. It's not to say that it isn't high, but we have other serious problems leftover from Prohibition that should be fixed first(some are applicable to some states, some aren't).

    Why am I not able to buy beer at the brewery for on premise consumption?
    Why can't breweries self distribute?
    Why can't I buy beer after certain time?
    Why can't I buy more than pints?
    Why can't a brewery sell wholesale if they sell food?
    If a brewpub sells food, why is there a minimum % of sales that has to come from food?

    So on and so forth....
    RyanMM, harperman69, GeezLynn and 2 others like this.
  15. rlcoffey

    rlcoffey Initiate (0) Apr 20, 2004 Kentucky

    Disagree. Legal products should all be taxed exactly the same. And more products should be legal.
  16. rlcoffey

    rlcoffey Initiate (0) Apr 20, 2004 Kentucky

    Not just state excise taxes either. KY has a relatively low excise tax rate, but an 11% distributor tax on alcohol. You see the charts of excise tax by state and it shows KY as one of the lowest, but that is BS, because of the distributor tax.
  17. rlcoffey

    rlcoffey Initiate (0) Apr 20, 2004 Kentucky

    That pdf is wrong. KY added the sales tax for off-premise sales a few years back, Im pretty sure BEFORE that came out, but close. The chose was between bumping up the 11% wholesale tax a few points or adding the sales tax in. The legislature chose the sales tax because customers were used to paying it, so wouldnt really notice.

    Edit: That KY change went in April 1, 2009, the pdf is dated Jan 1, 2010.
  18. jesskidden

    jesskidden Meyvn (1,305) Aug 10, 2005 New Jersey

    My comment above, quoting and elaborating on emmanths', concerned only Federal and State beer excise taxes- taxes unique to beer, unlike general sales taxes (that consumers pay), property taxes, payroll taxes that both breweries and other business pay, or wholesalers taxes.

    I guess you can always contact that website - Federation of Tax Administrators- contact page
  19. otispdriftwood

    otispdriftwood Defender (637) Dec 9, 2011 Colorado
    Subscriber Beer Trader

    Taxes - a convenient thing that EVERYBODY can complain about since EVERYBODY thinks they pay too much whether they are rich, poor, or somewhere in the middle. Now I dislike taxes as much as the next guy but even if taxes were lowered across the board, there would still be people who think they pay too much. And besides, statistics can be presented in many ways, or misrepresented entirely. Just like opinion polls, which I really think are misleading.
  20. rlcoffey

    rlcoffey Initiate (0) Apr 20, 2004 Kentucky

    They have been informed. But you shouldnt rely on such crappy out-of-date info. :slight_smile:
  21. jesskidden

    jesskidden Meyvn (1,305) Aug 10, 2005 New Jersey

    As errors go, an easy enough one to fix - a little Liquid Paper™ * and the footnote * Sales tax is applied to on-premise sales only is gone.

    * Yeah, 20th century technology - something tells me
    most Tax Administrators are most comfortable with that
    and I bet they used to buy the stuff by the 5 gallon bucket..
  22. billandsuz

    billandsuz Disciple (315) Sep 1, 2004 New York

    given that many people are in agreement that the tax on beer is actually relatively low, this data only points out that the ingredients for beer are cheap. it's not like we are not aware that beer is 98% water.

    if brewers have a hard time convincing a bunch of beer nerds that they pay too much tax, well, God bless them in their efforts to convince Congress.
    Boz12 likes this.
  23. drabmuh

    drabmuh Initiate (0) Feb 7, 2004 Maryland

    Are there any products available in the US where the cost of the product isn't made up primarily of taxes?
  24. FunkyMacGroovin

    FunkyMacGroovin Initiate (0) Sep 22, 2009 California

    Most of them, I would assume.
    drabmuh likes this.
  25. stupac2

    stupac2 Zealot (518) Feb 22, 2011 California
    Beer Trader

    I would actually ask "Is there any product available in the US where most of the cost is taxes?" This isn't Europe, we don't have a VAT and consumption taxes are quite small.
    vkv822 likes this.
  26. FunkyMacGroovin

    FunkyMacGroovin Initiate (0) Sep 22, 2009 California

  27. coreyfmcdonald

    coreyfmcdonald Savant (953) Nov 13, 2008 Georgia
    Beer Trader

    I know this is exaggeration on your part, but the ingredients outside of water make up more than an order of magnitude more than 2% by weight, volume, and cost.
  28. jesskidden

    jesskidden Meyvn (1,305) Aug 10, 2005 New Jersey

    It was 4% in 1996, according to Consumer Reports. (Obviously this chart is based on "macro" breweries' costs, but those companies are also the ones that The Beer Institute represents).

  29. coreyfmcdonald

    coreyfmcdonald Savant (953) Nov 13, 2008 Georgia
    Beer Trader

    Sorry - my post wasn't clear. He said beer was made up 98% of water, so I was responding to his post on the actual ingredients used to make the liquid, but I now realize even this is a bit subjective.
  30. stupac2

    stupac2 Zealot (518) Feb 22, 2011 California
    Beer Trader

    Hah, yeah that could be one. Though I think it would depend on the state.
  31. leedorham

    leedorham Crusader (701) Apr 27, 2006 Washington

    To really understand the impact of sin taxes you need to understand what additional taxes are levied on the product. Basically - how much more in tax does it cost you to sell a 12 ounce bottle of beer vs a 12oz bottle of water?

    I don't have the answer, but that's definitely the right question. It would vary from state to state, of course.
  32. jesskidden

    jesskidden Meyvn (1,305) Aug 10, 2005 New Jersey

    The Beer Institute has a number of studies on this topic (they used to have a separate website, too, but I've forgotten the name of it).

    EDIT- It's the joint website they run with the distributors organization, the NBWA - called Beer Serves America. Their Tax explanation page is here.​

    In pdf The Tax Burden on the Brewing Industry (2005) they print this chart:

    Total Consumer Cost Per “Bottle” (12 ounces) $1.16

    Breakdown of 40.6% of cost that is taxes:

    Beer-specific taxes $0.08
    Other sales, excise and direct taxes $0.17
    Federal income, payroll, and other taxes $0.20
    State and local income, payroll, and other taxes $0.02

    Sum of Taxes $0.47

    And the report also notes that "In comparison, total Federal, state, and local taxes equal 24.2% of all other purchases in the U.S."

    Their definition of Tax Burden includes:
    • Taxes paid at all stages of production, distribution, and sales;
    • Taxes related to sales, income, profits, and payroll;
    • Taxes paid to Federal, state, or local governments;
    Boz12 and leedorham like this.
  33. chefkevlar

    chefkevlar Disciple (336) Apr 17, 2010 South Carolina
    Beer Trader

    Beer drinkers are more likely to watch the presidential debates than the World Series or the NFL? Well now I know that whole report is made up
    stayclean likes this.
  34. mylar

    mylar Initiate (0) Dec 13, 2011 Pennsylvania

  35. stupac2

    stupac2 Zealot (518) Feb 22, 2011 California
    Beer Trader

  36. afrokaze

    afrokaze Zealot (580) Jun 12, 2009 Arizona
    Industry Beer Trader

    Lower beer taxes, raise cigarette taxes. Problem solved.
  37. dgs

    dgs Initiate (0) Jul 18, 2005 Pennsylvania

    I'm not sure I've seen the skepticism, but...

    My problem is not the tax, but the comments by some that beer is more expensive in PA than other states because of taxes. I just don't think that is the situation. It is, what I perceive, the the high distributor/retail markup in PA that bothers me. A case of Sam Adams Boston Lager (brewed here in PA) would cost me about $8-10 more in PA than across the border in NJ or DE. That is not due to taxes.
  38. Skoallrebel

    Skoallrebel Initiate (0) Sep 6, 2012

    not just the taxes but state federal and local excise taxes, sales tax and the bottle deposit. All of that goes straight to the government!
  39. cavedave

    cavedave Poo-Bah (2,290) Mar 12, 2009 New York
    Beer Trader

    As a libertarian/objectivist I find it immensely offensive that one person's morality can be imposed on another person via a punitive increase in the cost of a product.

    Those who feel morally opposed to beer are absolutely. completely, unanimously, unopposedly, and forever empowered never to buy any.
  40. alpineclimber

    alpineclimber Disciple (302) Feb 17, 2009 Alberta (Canada)
    Beer Trader

    Then you will definetly not like what happens in Canada with the taxation on items such as alcohol and cigarettes, which all goes to the federal government and helps fund our universal health care system. The tax on these products is very high, if you have ever been to Canada then it would be very obvious to you.

    I am not opposed to this form of taxation. But if my beer is taxed and I know how to moderate my consumption, than I want other so called unhealthy products to be taxed as well, such as junk food.
    Kuemmelbrau and EconomicIrony like this.
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