House Democrats Anger Craft Brewers, Justified Responses Ensue

A Ballard beer fan?
A Ballard beer fan?

At a press conference today in Olympia, House Democrats disclosed their new tax proposal. The Governor’s insane proposal to raise the tax on microbreweries by $0.50 a gallon, was watered down to a proposed $0.15 hike. Better, not good.

 

The new proposal would raise the tax on Big Beer, but just a bit higher than what craft brewers are going to pay. At least they are on the right path, but Washington brewers are going to fight tooth and nail on any tax increase. I am with them. The industry is too young and too fragile. Furthermore, few industries passively invigorate others like the brewery industry does. Farming, hospitality, creative, and many other industries benefit greatly – in Washington state – from these businesses.

 

So the Washington Brewers Guild has responded, and so has the great Dick Cantwell of Elysian Brewing. Read each of their justified responses. But brace yourself for a tax increase, because legislators have finally proposed an incremental approach. It’s time to rally your consumers and get them in contact with their congress person.

 

Here is the Washington Brewers Guild’s response because I fear it will be removed from their site at some point since it was posted on the front page:

 

House Budget Proposal

 

Listening to the press conference was pretty astounding that Rep. Carlyle wanted to be fair by continuing the R&D tax break for the small of the small, but going ahead and raising taxes on microbreweries. Here is our response:

April 10, 2013

Washington is believed to have the second highest market share for craft beer in the nation. Below are some statistics on why maintaining the small brewer tax rate at its current level allows for continued jobs production. Production data sheds light on the debate about equalizing alcohol tax rates among producers.

The Big 3 (Anheuser-Busch InBev, MillerCoors) employ around 25,000 people in the nation. Craft brewers employ over 100,000 people with only 6% of the marketshare. Which is a better investment in jobs growth? The current excise tax level is working. Washington breweries employed 3,499 people at the end of Q4 2011. Breweries are growing, expanding production facilities and adding jobs. Why lower the tax rate for multi-national breweries while raising it for homegrown Washington microbreweries, thereby cutting off the potential for job growth in a locally-owned and operated industry?

Equality in alcohol taxation: Anheuser-Busch InBev produced 99 million barrels in 2012 with MillerCoors following at 59 million. Together, the Big 3 produced 158 million barrels. Washington craft brewers, combined, only produced 293,716 barrels. 158 million : 0.24 million. To suggest that craft beer be taxed at the same rate as the Big 3 is hard to understand when combined, we make up less than 0.19% of their annual production. There is nothing equal about our industries. They probably spill more beer on their floor than the volume of my brewery’s annual production (2,700 bbls). We are so insignificant compared to the amount of beer they produce; suggesting that there be tax equality between such a Goliath and an itty-bitty microbrewery is astounding. They have economies of scale that we can not even begin to comprehend.

Washington State’s total beer sales were 4,013,072 barrels in 2012. An estimated 1,000,000 barrels are attributed to craft beer. Washington State craft brewers produced 293,716 barrels. We cannot even produce 1/3 of the demand for craft beer in our state. Washington brewers need the ability to continue to grow our industry, add jobs, and re-invest our profits back into our communities.

Annual Production in Barrels

Big 3: WA Craft Brewers

158,000,000: 293,716

1: 0.0019

 

While an appreciated reduction, the current House proposal of a tax increase of $0.15/ gallon still almost doubles our tax rate. Is favoring multi-national corporations over at-home jobs growth really the message the Washington government wants to send to citizens of Washington?

Heather McClung

Schooner EXACT Brewing Company
Washington Brewers Guild President

 

 

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