According to CNN Money, small craft brewers will see their taxes cut in half, from $7.00 to $3.50 per barrel for the first 60,000 barrels. Tax rates for liquor plunge even more, from $13.50 to $2.70 per gallon for the first 100,000 gallons produced or imported.
The Distilled Spirits Council, a trade group for major liquor companies like Bacardi or Diageo, praised the new tax plan, claiming it is the first major alcohol tax reform since the Civil War. Alcohol excise taxes are one of the oldest taxes imposed by Congress, with the first one dating to 1791.
“The consumption of ardent spirits particularly, no doubt very much on account of their cheapness, is carried to an extreme which is truly to be regretted,” Treasury Secretary Alexander Hamilton wrote in 1790, pushing for the first alcohol tax — which proved wildly unpopular and sparked the Whiskey Rebellion among frontier distillers. “Should the increase of duties tend to a decrease of the consumption of those articles, the effect would be, in every respect, desirable.”
Needless to say, the whiskey tax that started the rebellion remained in effect until 1802. When the country came under the leadership of Thomas Jefferson, who had opposed the tax in the first place, the whiskey tax was repealed.
Critics see only despair coming out of the alcohol tax cuts
The alcohol industry has been pushing for tax cuts for years, both large and small brewers and distillers. The industry spent $22.6 million this year lobbying lawmakers, according to Opensecrets, and $12.3 million in campaign contributions during the 2016 cycle. Keep in mind the monetary contributions came from both parties and the industry has support on both sides of the aisle.
However, while the alcohol industry is tickled pink with the gift from Congress and the president, public health advocates are not happy at all, claiming there are numerous academic research studies on the link between tax rates and alcohol consumption. They feel the tax rates should be increased, just like the tax on cigarettes in an effort to curtail smoking.
“The cheaper alcohol is, the more people drink and the more they have alcohol problems, and there is a huge international literature that has shown that over and over and over,” said David Jernigan, head of the Center on Alcohol Marketing and Youth at Johns Hopkins University. “The public health ramifications of this continue to be invisible to policymakers.”
“Cigarette taxes go up on a fairly regular basis, and alcohol taxes almost never go up — and in this case, they’re going down — and yet they are, in a lot of ways, similar products,” said Jernigan.
Sen. Rob Portman (R-Ohio), who sponsored the provisions, says he doesn’t believe the tax cuts will bring about an increase in alcohol-related programs. “I don’t think it will have that effect,” he said. “All it does is help small craft breweries and small distillers.” Interestingly, he didn’t mention the larger companies, like Coors or Budweiser, who would also benefit.
Sen. Ron Wyden (D-Ore.), who voted against the overall GOP plan but approves of the alcohol tax cuts simply said, “Moderation is the key, and you can’t legislate moderation.”
Seeing as the tax cuts for the alcohol industry will only last for two years, this means they will have to continue their lobbying efforts so that extra money they are saving from the lower excise taxes will probably also go to playing politics.
