Yesterday’s implementation of a new beer tax in Washington left some of us scratching our heads wondering what it all really means. Many of the mainstream press articles point out that this tax will not affect small, local breweries, but that is not entirely true. I spoke with Heather McClung, president of the Washington Brewers Guild, to help clear up some questions. Following are some details about the new tax.<\/p>\n
According to McClung, the issue isn’t just about the direct increase itself. “The real issue is that the way that this came about sets a horrible precedent. There was no talk of any beer tax all session long, and this initiative came to fruition within a week or two. None of the legislators talked with any key stakeholders, such as distributors, large breweries, small breweries, or the restaurant association, all of which will be affected by this. There was no public hearing, and they just pushed the tax through by using ‘small beer’ as the conscience-saver for all of the legislators. It really is kind of dangerous for the future.”<\/p>\n
McClung goes on to explain how the increase could affect retailers as well as local breweries indirectly. “It’s unclear at this point how many producers will suck up the tax, and how many will push it down the line. If they push it down, then the gap between macro beer and micro beer will theoretically lessen.” Heather makes a great point about the gap lessening between what is perceived to be value products vs. premium products. Sounds like a great thing for the local craft beer market, right? Well, maybe. She goes on to clarify, “I say theoretically, because retailers likely won’t allow that gap to become too little, because they need to maintain differential pricing between the two tiers of products. So, it’s possible that if they feel they need to raise macro prices they may also accordingly raise micro prices.”<\/p>\n
Mike Brown, Commissioner of Inspiration and Aspiration for Pyramid Breweries commented: “It is a regressive tax by nature. This isolates beer and not setting a tax on other beverages sets a dangerous precedent. While we appreciate the attempt to minimize the impact on craft brands who sell less than 60,000 bbls, the tax will still have a significant impact. Retailers, distributors, and bars will need to raise the price across the board to offset the tax, which will affect all beers and cause all beer prices to increase.”<\/p>\n