Brewers, Governor Fight New Hampshire Beer Tax Increase

Gov. Maggie Hassan

They’ve got a powerful ally in a governor who has sworn to veto it, but a proposed tax hike on beer sold in New Hampshire has nevertheless agitated beer producers and distributors across the state.

As proposed, House Bill 168 would raise the excise tax on beer sold from a wholesaler to a retailer by 10 cents per gallon. The current tax rate is 30 cents per gallon, second-highest in New England.

Reps. Charles Weed, D-Keene and Richard Eaton, D-Greenville proposed the increase, claiming it will help drum up an estimated $4.3 million for alcohol and drug abuse programs.

But the state’s craft brewers and beer distributors aren’t convinced and say that the tax will have negative repercussions, citing job creation and beer tourism, as well as retail beer sales overall, as potential areas that could be harmed.

“The beer industry in New Hampshire can’t afford a hit like this,” said Scott Schaier, executive director of the Beer Distributors of New Hampshire, a lobbying group. “We have hit a real bright spot with craft and local breweries. The industry has had a shot in the arm, so why would we want to cripple that right now?”

Indeed, New Hampshire has the highest per capita consumption of beer in the U.S. — although much of that is actually purchased by residents from neighboring states who take advantage of New Hampshire’s lack of sales taxes.

Schaier is concerned that if the bill passes, beer sales will decline as the excise tax increase would ultimately be passed on to consumers. He said the cost for a case of beer (four-and-a-half gallons) could increase by 75 cents after retailers and distributors make price markups. That increase, he believes, will impact sales from out-of-state visitors.

New Hampshire Gov. Maggie Hassan, also a Democrat, spoke out against the bill yesterday, saying that she would veto the beer tax if it came to her desk.

“We are quite happy to hear her say that,” said Schaier. “We are thankful that Gov. Hassan is committed to protecting the ‘New Hampshire Advantage.’” (The ‘New Hampshire Advantage’ is a term for the state’s lack of sales tax.)

“There are retailers who see as much as 80 percent of their beer sales come from consumers that live outside of New Hampshire,” Schaier said. “Consumers are incredibly price sensitive, especially with mainstream brands.”

John “JT” Thompson, a spokesman for Portsmouth-based Smuttynose Brewing, agreed.

“If you feel like you are getting enough savings, you will drive 10 or 15 minutes out of your way,” he said. “But if those savings are diminished, you might think twice before you make the trip.”

The proposed tax has also provoked the state’s beer industry to take a look at its economic value to the state. Schaier said he has assembled a research team to evaluate the industry’s effects on the New Hampshire economy in time for a hearing on the bill next Wednesday. That economic impact is especially relevant, according to Thompson and Schaier, at a time when neighboring New England states are also experiencing a craft beer resurgence.

“We have a lot of strong evidence to support people making the right decision, which in our opinion would be to vote against this bill,” Schaier said.

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