Lowest beer tax in country
Date posted: September 16, 2013
BUFFALO — Wyoming’s beer tax is the lowest in the nation at 2 cents per gallon — and it could stay that way after two motions to draft a bill to increase it and one motion to draft a bill to eliminate it failed in the Legislature’s Joint Revenue Interim Committee in Buffalo Friday.
The 13-member committee was split almost down the middle on the issue after hearing from alcohol distributors and microbrewery owners who said increasing the tax they pay on beer would place an undue burden on businesses that help local economies and from municipal leaders and substance abuse treatment center representatives who said the extra funds from an increased beer tax could go a long way towards helping problems caused by alcohol abuse in Wyoming.
The original bill the revenue committee was considering would have raised the beer tax and earmarked the extra funds to be given to treatment centers for alcoholics to help fight the devastating effects of alcohol abuse in the state.
If passed, the bill would have been presented by the Joint Revenue Committee to the Wyoming Legislature for consideration. Without support for the bill, it will have to be brought by an individual legislator, which means it is less likely to succeed.
Wyoming’s 2-cent beer tax is 4 cents lower than states like Wisconsin and Missouri that assess 6-cents-per-gallon tax. The national average is 28 cents per gallon on malt beverages, Wyoming Department of Revenue Director Dan Noble said.
In 1935 after the repeal of prohibition, states were given the ability to control the distribution of liquor as they saw fit, Noble said. Wyoming became a control state at the wholesale level, and the Wyoming Department of Revenue State Liquor Division decided to place an excise tax on wine, hard liquor and malt beverages.
It kept the distribution of wine and spirits under state control, meaning that the state-run warehouse in Cheyenne that sells wine and hard liquor to retailers around the state pays the excise tax. However, the liquor division allowed private distribution of beer, so private distributors of beer — microbreweries and beer warehouses for mainstream beer brands — must pay the excise tax each month.
The excise tax on beer has not been raised since 1935 and brings in approximately $265,000 per year in revenue, Noble said.
In comparison, the tax on wine is 3 cents per pint, garnering approximately $300,000 for the state general revenue fund, and 10 cents per pint on hard liquors garners $1.2 million.
The liquor division also marks up the price of wine and spirits sold in the state warehouse 17.6 percent, making the total revenue from taxes and fees on state-controlled alcohol approximately $14.5 million per year, Noble said.
Mike Moser, executive director of the Wyoming State Liquor Association, spoke against the beer tax increase at the committee meeting, claiming that Wyoming’s current system of mark-ups on wine and spirits and moderate excise taxes works well, bringing in three times more revenue from alcohol than neighboring states like Colorado.
He said that the beer tax should be left at prohibition prices since the system is working and since beer distributors and microbreweries contribute to local economies.
A sin tax
Representatives from microbreweries and restaurants spoke against raising the beer tax, citing the burden it places on small businesses with a limited profit margin as it is.
“There is a fine line between success and failure in small business, certainly in cities in Wyoming. As our business grows, and as numbers of small breweries across the state grow, any implication of tax is of concern to us not only for the financial impact but future impact of any implications regarding taxation,” Black Tooth Brewing Company co-owner Tim Barnes said following the meeting.
Wyoming Lodging and Restaurant Association lobbyist Chris Brown said an increase in the tax would trickle down to the consumer. Distributors would increase their prices on beer to cover the tax hike, which would force bars and restaurants to raise their prices, which would likely cause consumers to switch to cheaper brands of beer or order cheaper menu items or skip the appetizer, Brown said. That would harm businesses that contribute greatly to Wyoming’s economy, he said.
Moser noted that microbreweries must complete monthly paperwork and record keeping in order to pay only $40 to $50 worth of beer tax per year, making the tax an undue burden in several ways. Raising it would slice into their limited profit margin, he said.
Moser also cautioned against treating the beer tax like a user fee.
“Don’t tax the many to pay for the abuse of a few,” Moser said. “You’ll have to excuse the pun, but the excise tax is a hangover from prohibition. It’s a sin tax.”
Moser said if substance abuse centers need more money, they should ask the Legislature for it without asking for an increase in taxes.
A free ride
Those who spoke in favor of raising the beer tax said it was time Wyoming catch up with the rest of the nation, saying it would not be an unfair way to increase revenue and help people who need help.
“The beer industry has received basically a free ride since 1935,” Riverton Mayor Ron Warpness said. “It’s time they start paying for that ride.”
Warpness said he drinks alcohol and was not speaking as a zealot against any alcohol consumption. But, he said, he felt like he had to speak on behalf of his city, which suffers from serious alcohol issues.
“In my community, we have people who are dying from the abuse of alcohol. I feel that the industry that helps contribute to the problem should help pay for it,” Warpness said.
David Birney, director of Peak Wellness Center in Cheyenne, also said he wasn’t trying to demonize alcohol.
Birney pointed out that treatment centers help more than just abusers. He said they help communities by making families healthier and workplaces more productive. Birney also said an increase in the beer tax would provide a more stable funding stream for treatment centers that rely on grant funding that could run dry at any time.
A committee divided
Joint Revenue Committee Co-Chairman Ray Peterson, R-Cody, said he’d already written a draft of a bill that outlined how the tax would be collected and how it would work as far as distributing the increased funds to treatment centers around the state. He disagreed with concerns about the beer tax being called a user fee.
“It’s a direct tax on the user. That’s the intent,” Peterson said.
Peterson also noted it’s not unrealistic to think that grant money could run out.
“I will introduce the bill myself if the revenue committee doesn’t. It will be introduced this session one way or another,” Peterson said. “It’s a revenue generating bill.”
Sen. James Anderson, R-Casper, spoke on the opposite end of the spectrum, saying the beer tax was too much of a nuissance on businesses that help Wyoming’s economy.
Anderson made the first motion on the issue, proposing not only to not raise the tax but to eliminate it altogether.
The motion failed by a vote of five for and eight against.
Sen. Cale Case, R-Lander, asked if the committee really wanted the media to report that a revenue committee met to discuss a way to raise revenue and help treatment centers then decided to cut the tax and accomplish neither goal. He made a motion to draft a bill for consideration at the October meeting that would raise the beer tax and earmark that money for treatment centers.
That motion failed by a vote of five for and eight against.
Case then made a motion to draft a placeholder bill that would simply allow the committee to discuss the matter at its October meeting. It would not specify an amount to raise the tax or earmark the funds.
That motion failed by a vote of six for and seven against after a recount that was requested by audience members who accused committee Co-Chairman Rep. Mike Madden, R-Buffalo, of voting twice or miscounting the votes.
“People in the audience think there was skullduggery,” Madden said after the committee took a brief break. The committee held a roll call vote, with the clear understanding that a yes vote did not mean support for the tax increase just support for talking about the issue again. The roll call vote was six for and seven against, meaning the motion failed.
In order for the issue of raising the beer tax to come before the Wyoming Legislature, it will have to be brought by an individual lawmaker.