Brewers, Lawmakers Debate Over Proposed Tax Hike in Washington

Craft brewers throughout the state of Washington are lobbying against a proposed tax hike on beer sold in-state.

In 2010, the state excise tax on in-state brewers producing more than 60,000 barrels annually was temporarily raised from 26 cents per gallon to 76 cents per gallon in an effort to help increase state revenues during the recession. That increase was set to expire on July 1, 2013.

But instead of letting the tax expire, Washington Gov. Jay Inslee is pushing a state budget plan that would continue the tax beyond July 1 and expand it to small breweries producing less than 60,000 barrels. Small brewers currently pay about 15 cents for every gallon of beer sold in Washington.

In-state brewers argue that the proposed increase would slow growth and could put some small producers out of business.

“It doesn’t make economic sense,” said John Bryant, the co-founder of No-Li Brewhouse based in Spokane, Wash. “All of a sudden a small craft brewing industry that is creating a lot of jobs can become noncompetitive very quickly.

Bryant said he drove five hours from his home in Spokane to Olympia today to meet with Andy Billig, a state senator from the 3rd district in Spokane.

“We talked about the proposed tax increase, the opportunity that exists to develop new jobs and the different ways that revenue could be re-invested,” Bryant said.

But while Gov. Inslee believes that both large macro brewers and small craft brewers should be taxed at the same rate, the Washington House of Representatives is proposing that breweries which make less than 60,000 barrels annually be taxed a double their current 15 cent rate.

“To be responsible, I have to be against any hike in brewery taxes,” said Dick Cantwell, the co-founder of Seattle-based Elysian Brewing. “What we feel is acceptable is to maintain the rate at what we’ve been paying.”

Cantwell feels that large domestic brewers like Anheuser-Busch InBev and MillerCoors should pay a higher excise tax for beer sold in the state of Washington.

“Given the economies of scale that the larger domestic brewers enjoy, it is only fair that they pay a higher rate,” he said. “That is consistent with most states and on the excise taxes at the federal level.”

Washington’s beer industry members recently launched the web page, which features a countdown clock, news stories related to the tax proposal and case studies that support ending the 2010 temporary beer tax. Notable supporters listed on the page include 7-Eleven, Marine View Beverage and Redhook Brewery.

Similar attempts to raise the excise tax on beer were made in New Hampshire earlier this year. Those efforts were stopped after the New Hampshire House Ways and Means Committee rejected a bill that would have increased the excise tax on small brewers by 10 cents per gallon.