WASHINGTON – One Keystone State congressman believes Congress has yet to quench its thirst for tax cuts and is pressing to make happy hour a whole lot happier.
A bill sponsored by Rep. Phil English, R-Pa., who said he represents a district of hard-working, blue collar constituents who like to drink beer, would roll back the federal excise tax on beer to pre-1991 levels — about half of what it is today.
According to the Beer Institute, a Washington-based group that represents all of the major breweries in the country, 80 cents of every six-pack sold in America goes to state and federal coffers and beer drinkers pay a total of $3.4 billion in federal taxes. Total state and federal taxes on beer amounts to seven times what the nation’s brewers make in profits, according to the institute.
In 1990, Congress raised a variety of so-called “luxury” taxes on products such as furs, yachts and booze. The tax on beer went into effect in 1991, doubling the levy from $9 a barrel to $18 a barrel.
Since then, with the federal government running annual budget surpluses, all of the luxury goods have had their taxes repealed, except for those on alcohol products.
“We also feel that this is something that balances some of the other tax cuts we’ve been passing,” he said.
English said he thinks the current beer tax is regressive and disproportionately burdens the lower and middle working classes. He also said that any tax cut would help give a boost to the economy.
The Beer Institute agrees and has thrown its muscle behind the initiative to roll back the taxes for the last seven years, according to President Jeff Becker. He said the industry saw a 2.8 percent drop in sales in the first year of the tax hike. The results, he said, were sobering.
“A loss of 31,000 jobs and quite a bit of accumulative economic inactivity,” he said. “These were bricks and mortar jobs. This would be an excellent opportunity to get back on track again.”
But not everyone is rolling out the barrel just yet. Mothers Against Drunk Driving (MADD) is trying to put the kibosh on any tax cut they say would encourage people to drink and behave irresponsibly.
"Economic research indicates lower taxes on beer will lead to more deaths among young people in traffic accidents and other alcohol-related problems," said Millie Webb, MADD's national president, in a recent statement. "It's cheaper, it's more accessible. It's bad public policy to reduce the beer tax."
But English decried the attitude of some he called “neo-prohibitionists” for their support of the tax. “There are some who will push for higher taxes … looking to punish any consumption of the product,” he said.
“In my view, alcohol taken in moderation can have a positive affect,” he said, referring to past studies that have suggested that moderate consumption of wine can have beneficial effects on a body’s constitution. “The excise tax on wine is almost as high,” he said. “I’m looking to cut that, too.”
The Beer Institute’s Becker insisted this is a “tax issue” and pointed out that thanks to groups like MADD and other abuse prevention organizations, “we’ve seen a tremendous decline in alcohol abuse – no one has anything to fear in a small decline in beer tax relative to alcohol abuse.”
While the bipartisan bill has 150 co-sponsors, its supporters admit the effort might get lost in the fray of Congress’ other tax cutting efforts this session.
Still, the strange brew of Republicans and Democrats the bill has brought together heartens the beer lobby.
“There’s probably a bunch of reasons for that,” said Becker. “On one hand, beer is consumed by blue collar people for the most part – that’s appealing to Democrats because they are a large part of their constituency. As for Republicans, they have to some degree been in front on tax cut issues. It happens to be the perfect marriage.”