GOP's Tax Plan Has A Silver Lining For You Drunkards: Lower Taxes On Booze

Though it's mostly designed to cut corporate tax rates and pad billionaires' coffers, the recently introduced GOP tax plan actually has a silver lining for drinkers. Tucked into the plan is a provision to dramatically lower the excise tax on beer and liquor, which beverage industry groups have championed for years. The current excise tax bill is a compromise between a coalition of six alcohol industry groups: two from the beer side, two from wine, and two from spirits.

The upshot for drinkers: There's a possibility that lowering the excise tax on beer and spirits could lower their final cost to consumers and put more beer into the market. According to a May 2017 report prepared for two beer industry groups, The National Beer Wholesalers Association and the Beer Institute, beer generated $63 billion in tax revenue in 2016. That accounted for more than 41 percent of the retail price consumers paid for beer off the shelf.

But we shouldn't necessarily expect beer to be way cheaper instantaneously, cautions Bob Pease. He's the CEO of the Brewers Association, a trade group that represents small and independent craft breweries. He and the BA have worked to reform beer taxes since 2009. "We've never positioned this as an impact that would trickle down to the beer drinker but rather what this will lead to is job creation," Pease told The Takeout. "Cutting the federal excise tax rate in half would be historic. It would be a monumental change. For some brewery owners, it'll save $1,000, for others it could be $180,000. They're going to take that and invest that back into their infrastructure and their ability to make more and better beer."

While he's aware that the overall GOP tax plan isn't universally popular, Pease said the excise tax portion is a rare example of bipartisan agreement. In the Senate, excise tax reform has 55 cosponsors: 29 Democrats, 25 Republicans and one independent. In the House, the bill has 297 cosponsors. "It doesn't get much better than that," Pease said. The bill is especially popular among small craft brewers, who would see their excise tax slashed from $7 to $3.50 per barrel (31 gallons) of beer. Breweries who make more than 60,000 barrels per year would also see a decrease from $18 to $16 for the first six million barrels produced. But there remains a huge question: Will the overall tax plan pass? With at least one GOP Senator already saying he won't vote for it, it's no slam dunk. Beer Institute president and CEO Jim McGreevy said that's beyond the industry's control, but that he's proud to have favorable alcohol tax language included in the legislation. "We're going to let the political process work itself out here," McGreevy told The Takeout. "I talked to two brewers yesterday who told me that they already understand how much this bill would provide for them in tax relief and that they're planning how they could use it. They both talked about expansions of their facilities and ways that they could make more beer."