What the real Joe Sixpack thinks of Wyoming’s beer taxBy Kerry Drake — October 1, 2013
The beer industry is, not surprisingly, hopping mad about a proposal to raise the state tax on its product in Wyoming.
“The reality is that if the tax goes up, the price just gets raised and Joe Sixpack pays the price,” beer wholesaler Pat Higgins, owner of Orrison Distributing Co. in Cheyenne, told Joan Barron of the Casper Star-Tribune. He testified against the proposed tax hike at a recent Joint Revenue Committee meeting in Buffalo.
But I’ve actually talked to Joe Sixpack, and you know what? He says he doesn’t think any beer drinkers like himself should mind paying more in tax than the incredibly low 2 cents per gallon that the state has charged since 1935, when beer sold for $2.50 per case, or about a dime per can. The tax still amounts to just fractions of a penny per glass or bottle.
“Two cents a gallon? That’s absurd,” said Sixpack, whose real name is Don Russell, who has one of the best jobs in all of journalism. He writes a beer column for the Philadelphia Daily News that is nationally syndicated under the nom de plume Joe Sixpack. The name was his wife’s idea.
It’s not that Russell is a fan of tax increases. “Everybody objects to paying more taxes, no matter what,” he said. “A beer tax is a fairly regressive tax, because it’s [paid by] everybody at the same rate, regardless of their wealth.
“But it’s not an issue to me of whether beer drinkers can afford a few cents more per gallon or glass,” he added. “If that’s going to break your bank, you might want to re-examine your family finances.”
I agree. I don’t see the need for the state’s beer tax to be as high as Alaska’s, which tops the nation at $1.07 per gallon. But getting closer to the 28 cent per gallon national average seems reasonable, and the state could always use more money for the purpose that the beer tax is collected now: funding treatment centers for alcoholics, to the tune of about $265,000 per year.
The committee turned down two proposals to raise the state beer tax. The co-chairman, Sen. Ray Peterson (R-Cowley), said he will sponsor a bill to raise the tax to 4.5 cents per liter, or about 18 cents per gallon. It breaks down to about 1.6 cents per 12-ounce can.
Peterson said the state’s total tax revenue from all alcohol sales is about $1.7 million. A Wyoming Survey and Analysis Center report last year found that the state pays $27.6 million a year in direct costs from alcohol abuse. The indirect costs were estimated at $843 million.
“We seem to be a little short with the intake vs. the outgoing,” the senator said. “In short, we seem to subsidize our good drinking friends. … I don’t think it’s right that we expect the state to pick up 94 percent of the direct costs involved with treatment centers, rehab programs, law enforcement, emergency response teams, court costs, jail costs and all of the other programs aimed at assisting those that abuse alcohol.”
Unbelievably, though, some legislators think even collecting $265,000 a year from the beer tax is unnecessary. The panel’s other co-chairman, Rep. Mike Madden (R-Buffalo) told Barron that collection costs may be so high that the revenue doesn’t even warrant the price of collecting it. Fortunately, the committee also rejected an attempt to completely eliminate the beer tax.
Other backers of the measure portrayed the beer tax as a burden to the state’s microbreweries. They also said a hike would have a negative impact on related businesses, such as bars and restaurants, which could see customers buying cheaper beer or entrees or (horrors!) even skipping appetizers.
But how much would they actually have to raise their prices to cover the cost of increasing the beer tax? Barron reported that the current tax amounts to .18 cents on a 12-ounce bottle of beer that costs $3. Even quadrupled, which would be the rate Russell’s home state of Pennsylvania charges, it would still only be .72 cents per bottle.
Another contention of the no-tax crowd was that Wyoming beer drinkers will travel out-of-state to buy their brews. Really? With the high cost of gas, people will drive a long way to save a few pennies on beer? Not the smart ones.
Riverton Mayor Ron Warpness made what I consider to be the best argument in favor of raising the beer tax. According to the Sheridan Press, he told lawmakers in Buffalo, “In my community, we have people who are dying from the abuse of alcohol. I feel that the industry that helps contribute to the problem should help pay for it.
“The beer industry has received basically a free ride since 1935,” Warpness added. “It’s time they start paying for that ride.”
Wyoming’s 78-year-old state tax on beer is the lowest in the nation. Russell said the other four states with extremely low rates — Missouri, Wisconsin, Pennsylvania and Colorado — all have major breweries. Wyoming, of course, does not — but it does have a universal anti-tax mindset.
“Any penny you can knock off (the tax), the industry says is a help,” Russell said. “An increase may have some impact on small brewers, but really they just end up passing along those costs to consumers anyway.”
“Here in Philadelphia, we actually have a 10 percent tax on every drink served in a bar,” Russell noted. “If you pay $5 for a glass of good beer, 50 cents is tacked right on top of it.” He explained it’s a local tax that is used to help schools.
He said it’s hard to argue against taxes that are used for good causes like education or, as in the case of Wyoming’s beer tax, treating alcoholics. “How can you be against that?” he said.
If the beer industry is to succeed in lowering its taxes — or at least preventing any increases — it can make a better case at the federal level, where Russell said beer is taxed at a much higher rate. The Beer Institute, an industry trade group, estimates that about 45 percent of the retail cost of beer consists of federal, state and local taxes.
Government figures show that the federal tax on beer is $18 per 31-gallon barrel — about 58 cents a gallon or 5 cents per 12-ounce can. The tax is reduced to $7 per barrel or 2 cents a can for microbreweries.
The Center for Science in the Public Interest has proposed raising the federal excise tax on beer, wine and distilled spirits to help reduce the national deficit. According to the center, the increased rates would adjust for inflation and equalize the rates applicable to beer, wine and distilled spirits based on the percentage of alcohol in each product.
But Beer Institute President Joe McClain warned that for large brewers producing more than 2 million gallons of beer annually, the federal excise tax would double. For small brewers, he added, the rate could be as much as eight times higher than it is now.
The proposed federal tax increase on beer hasn’t gained much traction. Meanwhile, the Beer Institute and other industry groups are lobbying for the Brewers Excise and Economic Relief Act of 2013, or BEER Act, which would reduce the federal excise tax on beer and also protect brewers from future tax hikes.
Russell has been closely monitoring both the federal and state tax issues. He’s never been to Wyoming, and when I told him that the state has about 570,000 residents, he was incredulous. “There’s more people than that in my neighborhood!” he said, but later scaled down the population estimate in his section of Philadelphia to about 100,000.
The columnist said he’d like to visit Wyoming, especially after he was informed that it’s a good place to bike in warm weather, since that’s one of his other passions besides beer. So if you’re traveling in the state next summer, that guy you spot standing by his bike with a brew in his hand may not be just the average Joe Sixpack, but the famous one.
“That 2 cents is unbelievable,” Russell said as we concluded our telephone conversation. “It’s hard to believe Wyoming beer drinkers get away with that.”
— Veteran Wyoming journalist Kerry Drake is the editor-in-chief of The Casper Citizen, a nonprofit, online community newspaper. It can be viewed at www.caspercitizen.com.
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