Congress Considers Federal Excise Tax Increase

Small brewers are facing an imminent and extremely serious threat to their businesses. Several committees in the House and the Senate Finance Committee in Washington, DC continue to consider a number of potential funding sources for the major healthcare reform package moving through Congress.  One of the sources under consideration is an increase and equalization of the excise tax for alcohol beverages (at $16.00/proof gallon).  This could potentially triple the excise tax for 4.5% ABV beer and impose even higher excise tax rates for higher ABV beers.

If this proposal becomes reality, many small brewery businesses will suffer, some will close and consumers will face higher prices and diminished choice in the marketplace. A $1.00 per case excise tax increase will typically cost the consumer at least $1.69 due to successive mark-ups as the case moves from brewer to wholesaler to retailer.

Brewers Association brewery members have contacted their Senators to express their opposition to this proposal and BA leadership has been actively engaged in building the case against an excise tax increase, submitting a letter to the Senate Finance Committee outlining our opposition. See the Brewers Association Comments on Excise Tax Option for Health Care Reform Funding (PDF file).

Thus far, alcohol excise tax increases have not been included in any draft legislation. However, as Congress reconvenes following the August recess, deliberations will resume and the issue has the potential to get “hot” once again. BA staff will be following developments closely.