Beer tax cut proposed

Industry lobbies for return to pre 'luxury tax' levels

June 16, 2001 - The beer industry is mounting its most aggressive effort in years to roll back an increase in the tax on beer imposed in 1990. The rollback would benefit larger breweries more than the smallest.


Congress doubled the tax to $18 a barrel -- about a dollar a case -- in 1990 when it also passed tax hikes on luxury items such as planes and yachts. Three years later, most of the luxury taxes were rescinded, but the beer tax remained.

"It's an equity argument," Miller Brewing Co. spokesman Michael Brophy said. "It's certainly not a luxury item, and it's already taxed at the state level and will still be taxed at the federal level. There's a basic fairness issue." Rep. Jerry Kleczka (D-Wis.), one of the bill's 150 co-sponsors, admitted that chances of passage are slim.

Reducing the tax to its 1990 level would cost the federal government about $1.6 billion a year. Also, Mothers Against Drunk Driving opposes the proposal, arguing the bill would lead to more underage drinking and traffic deaths.

When the law increasing the tax passed in 1990, small brewers retained an exemption that taxed their production at $7 per barrel for the first 60,000 barrels sold. Therefore, those breweries would not benefit from the proposed rollback. The benefits to those making more than 60,000 per year would related to how much more than that figure they produce.

The industry hopes that a healthy budget surplus and a tax-cut proponent in the White House its chances have enhanced the chances, said Jeff Becker, president of the Beer Institute, the industry's trade association. The campaign includes ads in several Capitol Hill publications. Becker said most beer drinkers are low- and middle-income wage earners who could use a break. "They aren't buying $50,000 cars or private planes and yachts," he said.

More than 150 members of Congress have signed on as co-sponsors of legislation that would halve the beer tax.

Kleczka hasn't supported previous efforts to reduce the tax. He said he decided to be a co-sponsor this year because Congress voted to eliminate the estate tax. "If Congress can repeal the estate tax for billionaires, then Congress can roll back the beer tax for Joe Six-Pack," said Kleczka.

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