Excise Taxes

Increasing Beer Taxes is a Bad Idea at a Bad Time

Raising the tax on beer is a bad idea. Beer drinkers already pay a lot of extra taxes that are unfair and hidden. The tax system should be fairer with government services being paid by a broad base of people. It certainly makes no sense to focus the burden on those least able to afford more taxes. Hiking the beer tax will also cause economic ripples that will hurt, rather than help the economy. 

• Iowa beer industry profile: There are 35 beer distributors located in the State of Iowa. They are family-owned businesses that employ over 1,400 full-time employees, pay wages, salaries and benefits in excess of $55,000,000 and have a total economic impact on the State of $654,451,556. 

• Iowa’s border communities: One third of Iowa’s population lives in border communities. If there is an increase, the beer wholesalers couldn’t remain competitive – people would cross into the bordering states to buy their beer and while there they’ll more than likely purchase other items – all resulting in lost revenue to the State of Iowa. 

• Beer taxes are high enough already: The tax burden borne by beer consumers is far higher than average for the U.S. economy. 44% of the cost of every beer is hidden taxes. They break down as follows: 19% in federal income, payroll and other taxes; 19% in sales and excise taxes and 6% in State and local income, payroll and other taxes.

• Iowa has the third highest tax among the eight contiguous states: Nebraska - $9.61 a barrel (31 gallons), South Dakota - $8.50 a barrel, Iowa - $5.89 a barrel, Kansas - $5.58 a barrel, Illinois - $5.74 a barrel, Minnesota - $4.60 a barrel, Wisconsin - $2.00 a barrel and Missouri – $1.86 a barrel. Currently Iowa’s beer tax is ranked 24th in the country – just where it needs to be for a mid-sized state. The new tax would rank us 16th. 

• Beer taxes hit our customers hard: The impact of a tax increase is not measured in the pocket change per drink, but the millions of dollars that it all adds up to. Taking this spending power from them, and them alone, is grossly unfair. 

• Regressive and unfair tax policy: Many beer drinkers are working people, the Joe & Jane Six-Pack’s, who simply do not deserve to be targeted to pay for government services, while others get a free ride. 

• Beer creates many good jobs: Many jobs directly and indirectly depend on beer sales and many would be put at risk if the beer tax is increased. In fact, many of these jobs, are good paying jobs working for small businesses such as beer distributors. 

• Beer taxes will destroy good jobs: The millions of dollars that beer drinkers would have to pay doesn’t come out of thin air, but right out of their pockets. This not only hurts beer sales but also means less money in their pockets for everything else they buy. It took about 5 years for the beer industry to recover and get back on track following the 1991 doubling of the federal beer tax. Estimates too are that it cost 60,000 jobs nationwide, mostly from small businesses in beer wholesaling and retailing. 

• Bad precedent: Raising beer taxes will just lay the groundwork for other taxes being raised because of something else said not to be good for you. We should stop singling out one group or another and instead promote everyone’s stake in supporting public priorities.