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New beer tax hard to swallow
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Published: July 2, 2009
Updated: 07/01/2009 08:30 pm
Is this the time to force the price of a pint of beer to unprecedented heights?
Gov. Bev Perdue is touring the state, looking for support to help resolve the budget crisis by increasing the excise tax on beer. But beer lovers -- and wine lovers -- already carry more than their fair share. It is unreasonable to believe that they should shoulder more expense.
While the need for revenue is obvious, I have to question this particular strategy. First, excise taxes are regressive. They disproportionately affect lower-income wage-earners. That glass of beer at a ballgame will take a bigger bite out of the working man's paycheck. What's more, 50 percent of all beer purchases are from households with incomes of less than $50,000 a year. The proposed tax increase would ask average wage-earners to bear more of the burden in financing the state than the better-off.
Most people aren't aware that the North Carolina excise tax on beer is the sixth highest in the country. And you might be surprised to know that North Carolina collected more last year in beer taxes than all but four other states. Actually, the typical beer consumer spends 40.8 percent of the price of beer on taxes. It just strikes me as unfair -- regressive and already pretty high.
There are also questions about the rationale behind the excise-tax increase. The stump speeches revolve around the ominous phrase "sin tax." Excise taxes, by definition, are "event" taxes. They are taxes based on decisions made, unlike the "state-of-being" taxes like property and income taxes. Since the mid-19th century, reformers have identified excise taxes with "sin" and attempted to modify behavior through taxation.
This attempt at the demonization of beer just doesn't hold up. Most American households serve beer and do so responsibly. Actually, the overall per capita consumption has declined steadily for nearly 100 years. Today's beer drinkers are drinking less than their parents or grandparents. And the health benefits of moderate drinking have been documented in numerous medical studies.
In addition, we have to weigh the potentially crippling consequences for North Carolina's fledgling beer industry -- composed of nearly 50 small breweries, many of which are in Northwest North Carolina, and rapidly gaining respect around the country. These local businesses win awards for their beers and attract tourists to our breweries, restaurants and festivals. History has shown that a tax increase will hurt beer sales. This would lead to brewery closures, and with them, lost payroll and corporate taxes and rising unemployment expenses. Whatever economic benefit derived from the tax increase would be swallowed by the added economic costs of an industry thrown into crisis.
I am not going to argue that each and every one of us shouldn't do our part to deal with this economic crisis. I am arguing for fairness and rational thinking, not an emotion-driven quick fix.
The North Carolina beer industry and beer drinkers are already doing more than their fair share to support our state government. Just because we like our beer doesn't make us sinners or abusers -- or legitimate targets whenever there is a financial crisis.
We need to sit down together and look to progressive, not regressive solutions to our shared problem.
■ Daniel Bradford is the publisher of All About Beer magazine, which is published in Durham.
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