Montana may boost beer tax

Proposal would increase levy by more than three fold - 28 cents per 6-pack

Jan 28, 2003 - Montana has joined Western neighbors Wyoming and Utah in considering higher taxes on beer and wine.


Critics of the idea told a legislative committee last week it will hurt those who brew, distribute, sell and buy those products. They also warned it could somehow jeopardize malting barley facilities planned for Montana.

Proponents say that the money is needed at a time when the state is struggling with a projected budget deficit of $232 million. House Bill 318 is one of the few tax increase proposals to come from Republicans.

The bill would increase the tax on beer 3 1/2 times and nearly double the 27-cent tax on a liter of wine to 47 cents. Sponsor Rep. Stan Fisher estimated the change for beer would be about an additional 28 cents per six pack. He said his proposal is more reasonable than bills that recommend punitive-size increases in the cigarette tax as a way of finding money. Targeting that commodity, he said, would create a massive black market for cigarettes.

Fisher acknowledged wholesalers and retailers will pass on the higher tax to consumers, but said he doesn't believe the price increase will discourage consumption.

Neil Leathers of Big Sky Brewing Co. in Missoula said a tax increase could jeopardize his operation. The brewer, which employs 20 people, just completed a $1.3 million expansion, he said.

Kristi Blazer of the Montana Beer and Wine Wholesalers Association said Montana's current beer tax of $4.30 a barrel is not out of line when compared to rates in nearby states. Increasing that to almost $20 a barrel will make it the highest, she said.

Bob Pavlovich, co-owner of a Butte bar and a former legislator, said forcing a price increase in beer will drive away his customers. He suggested the Legislature consider taxing soft drinks and toilet paper as alternative sources of money.

Mark Taylor, representing Anheuser-Busch, said increasing the tax on beer could affect plans by the company to build a malting barley handling plant at Sidney. Bob Stephens from the Montana Grain Growers Association raised the same concern over plans for a malting barley processing factory at Great Falls.