Tag Archives: Taxes

Legislative Events, Newsfeed

The Small BREW Act (HR 494) with Jon Messier from Lucid Brewing

1 Comment

We recently had chance to talk with Jon Messier from Lucid Brewing about The Small BREW Act (HR 494). The Small Brew Act is a federal bill that would lower the small brewer excise tax on the first 60,000 barrels by 50 percent (from $7.00 to $3.50/barrel) and institute a new rate $16.00 per barrel on beer production above 60,000 barrels up to 2 million barrels. The bill has bipartisan support, and was coauthored by House Representative Erik Paulsen (R-MN).

For more information on the The Small BREW Act (HR 494) visit the Brewer’s Association. More about Representative Paulson’s visit to Lucid Brewing can be found here. To let your legislators know you support the Small BREW Act enter your address HERE and contact your U.S. representatives. This is a national bill, so local legislators won’t want to hear about it.

Legislative Events

Minnesota Legislators Will Not Increase Alcohol Excise Tax

mn sealThanks to Governor Dayton and members of the Minnesota Legislature for having the wisdom to not raise the excise tax on beer and alcohol. Brewing is an important part of our culture and community.

Thank you to everyone that helped make this happen, from brewers to consumers, the only way this and other initiatives work is because people got involved and made their voices heard.

From Star Tribune –
DFL Gov. Mark Dayton and Democratic legislative leaders scrapped a proposed alcohol tax hike and an income tax surcharge on high earners as part of a last-minute budget agreement.
The leaders convened a late-night meeting Thursday to resolve crucial differences as legislators enter their final few days of the legislative session.

Brewers, retailers, and consumers rejoiced at at the announcement.

Summit Brewing Founder Mark Stutrud was thankful, but rightfully cautious.Petition signing

Mark Stutrud –
…there will be no increase in excise taxes on beer from this year’s state legislative session. For those of you who actively contacted Gov. Mark Dayton and your legislators, Summit Brewing Company would like to say ‘thank you’ for your activism. We also want to thank the legislators and Governor Dayton for listening to our concerns in regard to the effect the proposed tax hike would have had on not only Summit and our consumers, but on the growing craft brewing industry at large in the state of Minnesota.

Stutrud’s comments hold a lot of value, the fight is only over for now. Beer and alcohol are easy “sin-tax” targets for legislators looking to raise revenue.

Legislative Events, Newsfeed

StopMnDrinkTax.org

The House and Senate version of the Tax Omnibus bill are in conference committee to hash out differences between the bills. The House version has a steep increase alcohol taxes. You can links and language below.

We’ve created StopMnDrinkTax.org to give you an easy resource for contacting your legislators.  Please, use it and share it with your friends.

Rep. Paul Thissen– Click here to email
Call: 651-296-5375

Sen Tom Bakk– Click here to email
(651) 296-8881

 

Link to the Senate version.

Link to the House Version.

House language pertaining to excise tax.

59.32    Sec. 12. Minnesota Statutes 2012, section 297G.03, subdivision 1, is amended to read:
59.33    Subdivision 1. General rate; distilled spirits and wine. The following excise tax is
59.34imposed on all distilled spirits and wine manufactured, imported, sold, or possessed in
59.35this state:

 

60.1 Standard Metric
60.2
60.3
60.4		 (a) Distilled spirits, liqueurs, cordials,
and specialties regardless of alcohol
content (excluding ethyl alcohol)		 $ 5.03
11.02per gallon		 $ 1.33
2.91per liter
60.5
60.6
60.7
60.8		 (b) Wine containing 14 percent or less
alcohol by volume (except cider as
defined in section<statute_ref>297G.01, subdivision
3a )		 $ .30
2.08 per gallon		 $ .08
.55per liter
60.9
60.10
60.11		 (c) Wine containing more than 14
percent but not more than 21 percent
alcohol by volume		 $ .95
2.73 per gallon		 $ .25
.72per liter
60.12
60.13
60.14		 (d) Wine containing more than 21
percent but not more than 24 percent
alcohol by volume		 $ 1.82
3.64 per gallon		 $ .48
.97per liter
60.15
60.16		 (e) Wine containing more than 24
percent alcohol by volume		 $ 3.52
5.34 per gallon		 $ .93
1.42per liter
60.17
60.18		 (f) Natural and artificial sparkling wines
containing alcohol		 $ 1.82
3.60 per gallon		 $ .48
.95per liter
60.19
60.20		 (g) Cider as defined in section<statute_ref>297G.01,
subdivision 3a		 $ .15
1.93 per gallon		 $ .04
.51per liter
60.21
60.22		 (h) Low-alcohol dairy cocktails $ .08
1.36 per gallon		 $ .02
.36per liter

 

60.23In computing the tax on a package of distilled spirits or wine, a proportional tax at a
60.24like rate on all fractional parts of a gallon or liter must be paid, except that the tax on a
60.25fractional part of a gallon less than 1/16 of a gallon is the same as for 1/16 of a gallon.
60.26EFFECTIVE DATE.This section is effective July 1, 2013.

 

60.27    Sec. 13. Minnesota Statutes 2012, section 297G.03, is amended by adding a
60.28subdivision to read:
60.29    Subd. 5. Small winery credit. (a) A qualified winery is entitled to a tax credit of
60.30$2.08 per gallon on 50,000 gallons sold in any fiscal year beginning July 1. Qualified
60.31wineries may take the credit on the 18th day of each month, but the total credit allowed
60.32may not exceed in any fiscal year the lesser of:
60.33(1) the liability for tax; or
60.34(2) $104,000.
60.35(b) For purposes of this subdivision, a “qualified winery” means a winery, whether
60.36or not located in this state, producing less than 100,000 gallons of wine in the calendar
60.37year immediately preceding the calendar year for which the credit under this subdivision
60.38is claimed. In determining the number of gallons, all brands or labels of a winery must
60.39be combined. All facilities for the production of wine owned or controlled by the same
60.40person, corporation, or other entity must be treated as a single winery.
61.1EFFECTIVE DATE.This section is effective July 1, 2013.

 

61.2    Sec. 14. Minnesota Statutes 2012, section 297G.04, is amended to read:
61.3297G.04 FERMENTED MALT BEVERAGES; RATE OF TAX.
61.4    Subdivision 1. Tax imposed. The following excise tax is imposed on all fermented
61.5malt beverages that are imported, directly or indirectly sold, or possessed in this state:
61.6(1) on fermented malt beverages containing not more than 3.2 percent alcohol by
61.7weight, $2.40 $25.55 per 31-gallon barrel; and
61.8(2) on fermented malt beverages containing more than 3.2 percent alcohol by
61.9weight, $4.60 $27.75 per 31-gallon barrel.
61.10For fractions of a 31-gallon barrel, the tax rate is calculated proportionally.
61.11    Subd. 2. Tax credit. A qualified brewer producing fermented malt beverages is
61.12entitled to a tax credit of $4.60 $27.75 per barrel on 25,000 50,000 barrels sold in any
61.13fiscal year beginning July 1, regardless of the alcohol content of the product. Qualified
61.14brewers may take the credit on the 18th day of each month, but the total credit allowed
61.15may not exceed in any fiscal year the lesser of:
61.16(1) the liability for tax; or
61.17(2) $115,000 $1,387,500.
61.18For purposes of this subdivision, a “qualified brewer” means a brewer, whether or
61.19not located in this state, manufacturing less than 100,000 200,000 barrels of fermented
61.20malt beverages in the calendar year immediately preceding the calendar year for which
61.21the credit under this subdivision is claimed. In determining the number of barrels, all
61.22brands or labels of a brewer must be combined. All facilities for the manufacture of
61.23fermented malt beverages owned or controlled by the same person, corporation, or other
61.24entity must be treated as a single brewer.
61.25EFFECTIVE DATE.This section is effective July 1, 2013.

 

Newsfeed

National Beer Excise Taxes – By the Numbers

STATE TAX RATES ON BEER
EXCISETAX RATES
($ per gallon)		 GENERALSALES TAX APPLIES OTHER TAXES
Alaska 1.07 n.a.
Hawaii 0.93 Yes $0.54/gallon draft beer
Minnesota (proposed) 0.90 — under 3.2% – $0.077/gallon, 9% sales tax
South Carolina 0.77 Yes
Washington (1) 0.76 Yes
North Carolina 0.6171 Yes
Alabama $0.53 Yes $0.52/gallon local tax statewide
Florida 0.48 Yes
Mississippi 0.4268 Yes
Utah 0.41 Yes over 3.2% – sold through state store
New Mexico 0.41 Yes
Oklahoma 0.40 Yes under 3.2% – $0.36/gallon; 13.5% on-premise
Maine 0.35 Yes 7% on-premise saales tax
Georgia 0.32 Yes $0.53/gallon local tax
Louisiana 0.32 Yes $0.048/gallon local tax
Nebraska 0.31 Yes
New Hampshire 0.30 n.a.
South Dakota 0.27 Yes
Vermont 0.265 Yes more than 6% alcohol – $0.55; 10% on-premise sales tax
Virginia 0.26 Yes
Connecticut 0.24 Yes
Arkansas 0.23 Yes 3% off- 10% on-premise tax
Illinois 0.231 Yes $0.29/gallon in Chicago and $0.06/gallon in Cook County
Michigan 0.20 Yes
California 0.20 Yes
Texas 0.20 Yes 14% on-premise and $0.05/drink on airline sales
U.S. Median $0.350
Iowa 0.19 Yes
Kansas 0.18 — over 3.2% – {8% off- and 10% on-premise}, under 3.2% – 4.23% sales tax
Ohio 0.18 Yes
West Virginia 0.18 Yes
Arizona 0.16 Yes
Nevada 0.16 Yes
North Dakota 0.16 — 7% state sales tax, bulk beer $0.08/gal.
Delaware 0.16 n.a.
Idaho 0.15 Yes over 4% – $0.45/gallon
Minnesota
(current)		 0.15 — under 3.2% – $0.077/gallon, 9% sales tax
New York 0.14 Yes additional $0.12/gallon in New York City
Montana 0.14 n.a.
Tennessee 0.14 Yes 17% wholesale tax
New Jersey 0.12 Yes
Indiana 0.115 Yes
Massachusetts 0.11 0.57% on private club sales
Rhode Island 0.10 Yes $0.04/case wholesale tax
Maryland 0.09 — 9% sales tax; $0.2333/gallon in Garrett County
Dist. of Columbia 0.09 Yes 9% off- and on-premise sales tax
Oregon 0.08 n.a.
Kentucky 0.08 Yes 11% wholesale tax; * general sales tax applies to on-premise sales only
Colorado 0.08 Yes
Pennsylvania 0.08 Yes
Wisconsin 0.06 Yes
Missouri 0.06 Yes
Wyoming 0.02 Yes
 U.S. Median

 

  $0.350

 

  

 

  

 
Source: Federation of Tax Administrators http://www.taxadmin.org (January 1, 2013)
Note: n.a. = not applicable. These 5 states do not have a general sales tax.
(1) An additional $15.50/barrel tax will expire on 6/30/2013, reducing the tax rate to 0.26/gallon.
Legislative Events, Newsfeed

Death and Taxes

Taxes

It has been a while since the liquor excise tax has increased in Minnesota, and there is a movement afoot at the Capitol to change that.

The House Tax Omnibus HF 677, will increase the tax on liquor, wine, and beer in Minnesota by substantial amounts, as will the Senate version.  There are a few differences between the bills.  Both have massive increases, but the senate version creates an impact fund to go toward nonprofit entities that run substance abuse programs.

The tax increase is being sold as a mere pennies-per-pint increase, a notion that is entirely false.  In actuality, the tax increase is far more than a few pennies per pint.  The proposed state excise tax has an increase from $4.60 to $27.75 per 31-gallon barrel.  This is a 6-fold increase to one of the few industries showing growth in Minnesota.

Here is the terrible part about the tax increase; it gets passed to you, the consumer.  Brewers aren’t just going to pay the extra cost to the state and be done with it.  To cover the increase, brewers will increase the price that wholesalers pay, then wholesalers will pass that increase to retailers, and retailers will pass it to you.  Say what you want about the 3-tier system, but this is the system we have and it isn’t going away soon.

Follow along for some math fun!

Under the current tax structure:
Local brewery sells keg for $200
Wholesaler sells keg for $260 (30% increase)
Bar/store sells keg for $338 (30% increase)

Under the proposed tax structure:
Local brewery sells keg for $227
Wholesaler sells keg for $295 (same 30% increase)
Bar/store sells keg for $384 (same 30% increase)

See how a $27 tax can quickly become a $46 per Bbls increase? Include the federal excise tax, state sales tax, state alcohol tax, and local taxes, it is obvious that the government likes to dip its beak into your beer and drink heartily.

I think it is a really, really bad thing.

– Jacquie Berglund, Founder and CEO of FINNEGANS Inc.

But, not all governments are created equal. Of the surrounding states, Minnesota is currently in the middle of the pack when it comes to excise tax. South Dakota has a higher state excise tax at $8.50 a Bbls, and Wisconsin only taxes $2.40 a Bbls.  It is worth noting that South Dakota is the only other state in the region that also has a special Alcohol Tax.  The South Dakota special alcohol tax is 2%, and we beat them at 2.5% on gross receipts.

Death

Proponents of the tax increase claim that the extra tax revenue will offset the cost counties pay to run addiction centers and other alcohol-related medical expenses. If the idea is to offset the county costs, why is the tax revenue going into the state general fund? If counties like Hennepin are interested in offsetting the cost alcohol has on society, they should tax it at the county level. In fact, there are already numerous special taxes in downtown Minneapolis as they tax everything from dancing to liquor.

Breweries in Minnesota are doing their best to catch up to the rest on the country.  You will read all kinds news about the craft brewery explosion in Minnesota, but there are over 2,500 breweries in the country and we have less than 50.  We are a good deal behind the rest of the nation when it comes to enjoying local craft beer.  Increasing the cost to operate a brewery will only hinder the growth we’ve begun to see.

The only silver lining in the proposed tax increase is a provision that gives a credit to brewers on the first 50,000 Bbls brewed in a year.  The tax credit is nice, but it leaves breweries like Summit, Schell’s, and Cold Spring to pay a substantial amount of the tax.  The 50,000 ceiling is puzzling.  Nationally, brewers that produce less than 6 Mil Bbls a year are considered small.  A tax credit on 50,000 Bbls a year doesn’t do much to soften the blow of the proposed tax increase.

Unlike local wine and beer producers, there is no protection for local craft distillers in the proposed tax increase. Local distilling is an even smaller industry than brewing and wineries. Small distilleries are only beginning to have a presence here in Minnesota. Is the idea to collect more taxes from distillers, or make sure there are none here to pay the tax?

Minnesota is the home of prohibition and Andrew Volstead, but that doesn’t have to be our legacy. Prohibition is dead. Volstead is dead. This tax increase needs to die, too.