State Taxes on Beverage Alcohol
Increasing the Burden on Consumers and the Hospitality Industry
Alcohol Taxes Already Too High
In this soft economy, many states are finding it difficult to afford the spending habits that were ratcheted up during years of prosperity. Unfortunately, many decision makers will look to increasing taxes to close budget gaps, which will likely exasperate the problems in the economy with more job loss. It is important to remind decision makers that alcohol and hospitality tax increases can be no part of a healthy solution to budget woes.
Responsible consumers of beverage alcohol already pay more than their fair share – beverage alcohol taxes comprising an average of more than 50% of the purchase price. At such a high rate, raising alcohol taxes any further would only serve to further depress the hospitality industry, risk jobs, reduce overall tax revenue, and all while penalizing the more than 100 million responsible beverage alcohol consumers.
Alcohol Tax Increases Do Not Benefit the State
Beverage alcohol products rank among the highest taxed consumer items available today in the United States. In fact, direct alcohol excise and sales taxes levied at the federal, state, and local levels account for more than one-third of the shelf price of many popular brands. The result is that government at all levels earns $2 from the sale of beer, wine, and spirits for every $1 earned by producers, wholesalers, and retailers. Economic studies have consistently demonstrated that punitive taxes on beverage alcohol result in lost jobs and decreased tax revenue.
Excise Tax Increases Put Thousands of Workers out of Jobs
A tax on beverage alcohol is a tax on the hospitality industry – threatening the millions of jobs created by manufacturers, wholesalers and retailers. Federal, state and local governments lose when excise taxes on beverage alcohol are raised. The impact is felt throughout the U.S. economy. For example, the last two federal excise tax increases on spirits resulted in:
- The 1991 increase resulted in a reduction in total federal alcohol excise tax revenues for the succeeding 5 years.
- The elimination of 98,000 jobs generated directly and indirectly by the distilled spirits industry.
- Nearly $1.3 billion in lost wages.
- A total $1.1 billion reduction in personal and corporate income, sales, and property tax revenue to federal, state and local governments.
- States paid out more than $150 million in unemployment benefits.
Economic Analyses of Current Tax Increase Proposals:
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