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By now, you have probably heard about Governor Inslee’s proposed budget and his plan to expand and extend the beer tax. If you are like most people, you really do not know what it all means. Heck, maybe you understand it better than I do. Below, I try to explain it to you.

Nutshell Opinion: I love living in a state with a vibrant and growing craft beer industry. I recognize that the Washington Brewers Guild wants to protect what I love. As I often do, on this issue I stand in support of the Washington Brewers Guild. If they tell me to contact my congressional representatives in opposition to this tax proposal, that is what I will do.

Why do I think we need to protect and foster the beer industry? Washington’s beer industry, from grains to glass, is responsible for about $4.3 billion in revenue and about 42,000 jobs. Click here to read the report on MyNortwest.com. Currently, there are about 175 breweries in Washington. The number is nebulous because of how fast it is growing.

And Now…

I really wish there was a quick and easy way to address this issue. There isn’t. I hope you will bear with me while I try to explain it in a just manner. Correct me, share information, but know that I’m not trying to sound like I know everything. Be nice. Be civil. If you are smarter than me, you aren’t the first, so please don’t rub it in.

Maybe you don’t want to think about this too much and you just want someone to tell you what to think. I’ve talked to quite a few people in the brewing industry over the past few days. If you only need to know one thing, understand that the brewing industry is freaking out about this tax. It is immense. It is drastic. They want your help. From the largest craft brewery in the state to the smallest nano-brewery, I cannot imagine that anyone in the beer-making business thinks this is a good tax.

I happened to be hanging out with a brewery owner last week shortly after we’d both found out about the proposal. He was visibly upset. In his words, “This is the kind of stuff that keeps me awake at night.” He explained what it would mean for his young, growing business. It was drastic. HAVING to raise his prices in order for his business to stay viable, yet still having to compete with out-of-state breweries not paying the tax. He worried about pissing off customers who would not understand why he had to raise his prices. And more ugly stuff.

I couldn’t help thinking that his words would have convinced anyone to oppose this tax proposal. Even Governor Inslee himself.

If that’s all you need to know, there it is.

FYI – The Washington Brewers Guild is a trade organization that represents the state’s breweries in matters of politics and policy. The Guild is a voluntary organization. Not all breweries opt to be members of the Guild. Do not confuse The Guild with the Washington Beer Commission—they are two separate entities with two different missions. The Guild is politics and policy. The Commission is marketing and promotions. This is the Guild’s fight.

Just Another Sin Tax

No, strictly speaking, this is not a sin tax. This is an excise tax. If it were a sin tax, they would be taxing beer drinkers directly and making us pay for our sins. The beer-drinking public is a large and powerful lobby. They probably don’t want to mess with us. Consumers will only end up paying the trickle down of this tax. It will be significant for consumers, but it will be drastic for breweries.

Understand that this tax is only paid by Washington’s breweries. It is not paid by Washington’s distilleries or wineries. Even if it were a sin tax, it would only be a tax on the sin of brewing beer.

I know you want to know how much $$$$. Stay tuned.

Understand that this a state excise tax. It will only be levied against breweries in Washington.

The Facts

Fact: Washington breweries already pay an excise tax on every drop of beer they produce. It is already one of the highest in the nation. This proposal would drastically increase the excise tax.

Fact: In 2010 a new, additional beer tax was imposed on Washington’s breweries. “The beer tax was originally enacted as a temporary response to an economic recession,” said State Representative Eileen Cody in a response letter I received this morning from her office. The tax is scheduled to end in July of this year. The Governor now proposes extending it beyond the sunset date. This tax was intended to be temporary. That is an irrefutable fact.

Opinion: That’s what they mean by “extend.” They told us it was temporary. They lied. Now let’s talk about “expand.”

I know you want to know how much $$$$. Stay tuned.

Fact: Expanding the tax. This is the meat of the matter. Up until now, this tax only affected breweries that produced more than 60,000 barrels per year. In other words, it only affected Redhook, which is the only brewery in the state producing that much beer. The first 60,000 barrels a brewery produces are exempt from this tax. That means, up until now, only Redhook paid this tax. And they only paid it on the beer they produced in excess of the 60,000 threshold.

“Expanding” this tax means eliminating the 60,000 barrel threshold so that all breweries in the state have to pay this tax on all beer they produce. Not just Red Hook, but Elysian, Diamond Knot, MT Head, Mount Tabor, Foggy Noggin, and Birdsview Brewing will now pay this tax on every drop of beer they brew. Every brewery in the state will now have to start paying this tax on every drop of beer they brew. That’s a fact.

I know you want to know how much $$$$. Stay tuned.

Opinion: The supporters will tell you that this is not a new tax. Instead, they call it “extending and expanding an existing tax.” They are lying. Right now, Airways Brewing does not pay this tax. If it comes to be, Airways Brewing must start paying this tax. How is that not a new tax?

Also, they call it “extending and expanding” instead of what it really is – an obscenely humungous excise tax increase that threatens to cripple the industry. And now…

The Numbers

Numbers can be fudged so I hesitate to call them facts. Take mine with a grain of salt, but I’m trying. Many have summed up the tax, rightly so, as the “50 cent per gallon tax.”

I admit that reading SB 5039 (the actual Senate Bill we are discussing) and trying to extract meaningful numbers is difficult. I must believe what I’ve been told by people who actually have a horse in this race. I’ve been told it would raise Washington’s per-barrel tax from about $8 to about $23.

Someone check my math. That can’t be real. An almost 300 percent increase?

FYI: In Oregon, the tax rate is $2.60 per barrel. In Idaho the rate is about $4.60 per barrel. Even as the taxes exist right now, our Washington breweries are at a severe disadvantage.

Please, go read other stuff to learn more about the numbers. Numbers can be fudged, but nobody can fudge theses numbers and make them look pretty.

Opinion

I love living in a state with a vibrant and growing craft beer industry. I recognize that the Washington Brewers Guild wants to protect what I love. As usual, on this issue I stand in support of the Washington Brewers Guild. If they tell me to contact my congressional representatives in opposition to this tax proposal, that is what I will do. In fact, that is what I’ve already done.

I think this tax will be devastating, especially for new breweries, and would-be-breweries. It will seriously affect their ability to recoup the massive cost of startup. Beer is already a small-margin game and breweries are already paying their fair share of taxes.

I refuse to see it as anything but a new tax. Breweries that are not paying the tax now will suddenly have to pay this tax. How is that anything but new? You can call it an increase if you want, but I see it as a new tax.

It is drastic. It’s like raising the state sales tax to 30 percent with the stroke of a pen. Can you imagine them trying to do that?

I think our lawmakers feel like they can just slip this one past us, hoping nobody will notice what a stupid thing this is. Heck, they even announced this proposal during the Craft Brewers Conference. Did it on the downlow. When the Governor made his announcement, many of our state’s brewers (including the President of the Washington Brewers Guild) were on the other side of the nation at an industry convention. How convenient. That’s dirty pool.

I think it is unfair to target the brewing industry just because it is a growing industry.

If it’s a sin tax, spirits and wine should also be impacted.

Why did we legalize weed? Weren’t taxes supposed to be involved?

I think our lawmakers should foster the brewing industry. Not coddle it, but foster it. Breweries are notorious job-creation machines. They create a lot of jobs, especially when compared to other businesses of their financial size.

Nationwide, craft beer is a growth industry. Let’s continue to lead the way. For sure, let’s not fall behind.

I understand that the state needs money, but I think it is unfair to put so much of the burden on this one industry.

My Letter

Feel free to cut and paste, if you like. Click here to find and contact your legislators. It is very easy.

I am writing to tell you that I stand in opposition to the current plan to extend and expand the beer tax. I believe this is an unfair and unwise proposal. The craft beer industry is one of Washington’s few growth industries. It should not be attacked. It should be fostered and nourished. Washington has long been a leader where craft beer is concerned. Now that craft beer is becoming a nationwide phenomenon, let’s not hamstring our local breweries. Let this industry grow and prosper. This proposed tax threatens the industry’s ability to continue growing and further contribute to the state’s revenue stream. The current excise tax on barrel production is already high enough. Our state’s breweries are already paying their fair share.

End This Beer Tax Now dot com

There is a website out there (endthebeertaxnow.com) receiving a lot of attention from beer geeks. It’s a good source for information. I am glad it is there. As with any information, you must consider the source. In this case, an organization called End The Beer Tax Now Coalition. As I understand it, that organization came into existence when this beer tax was originally introduced a few years ago. Christine Gregoire was Governor at the time and a hotly contested gubernatorial race lingered in the air.

There might be a political message behind some of the things said on endthisbeertaxnow.com. In some cases, the message might stretch beyond the beer tax. Maybe you agree with that message, maybe you don’t. The Washington Brewers Guild is not affiliated with the End The Beer Tax Now. At least not yet. Maybe they will join forces. Maybe they won’t. They certainly share a common goal, at least on the surface.