Well Spring is the time for crazy law making in Iowa. Checking on the Capitol, i’ve learned that the Keg Registration Laws that I ranted on earlier have died in Committee… Good Riddance!
The Bad News is that a bill to double the state tax on beer (called the Barrel Tax) has been introduced into the Senate. There is word that a companion bill is floating around in the Iowa House as well.
Here is the bill:
Senate File 384
All revenue derived from the barrel tax shall accrue to
the state general fund, except that fifty percent of the
revenue derived from the increase in the barrel tax over the
level of tax applicable on June 30, 2005, shall be deposited
into the special revenue account established in section 123.53
to be used by the substance abuse division of the Iowa
department of public health for substance abuse treatment and
prevention programs.
If this seems a bit deja vu, thats because it is. However, with the fiscal situation, and the all the talk of a increase in other taxes, this is much more serious this time around. I could definately see this getting tacked onto the much discussed Cigarette tax bill.
Its no surprise that we are completely against this idea of raising the state tax. Let me outline some reasons.
First, Iowa’s tax is currenty at the median for beer tax in this country at 0.19 cents per gallon. For comparison:
Illinios 0.185
Wisconsin 0.06
Missouri 0.06
Kansas 0.18
Indiana 0.115
Nebraska 0.31
South Dakota 0.28
Minnesota 0.15
Doubling the barrel tax would take Iowa’s tax to 0.38 cents a gallon, higher than any other neighboring state. It won’t do our economy a lick of good to make one of most commonly purchased commodity items more expensive than any of our neighbors.
It certainly will not help us here at Millstream, we payed 5000$ dollars in state beer tax in 2004 and 9000$ dollars in federal beer taxes. This does not include sales tax or the many other form’s of taxes on beer, including one time annual ’special tax stamps’ and licensing fee’s. Last year we were able to make a small profit on our business, which we are turning around to reinvest. This increase in tax would cost us more than 5000$ a year and take away most of our profits. Of course, we would pass the price increase right along to our customers, but market pressures are already intense to keep beer below 7.00$ a six pack. If our prices go up, people will buy cheaper products and our sales will go down. This increase will amount to .11 cents more a six pack.
In short, Millstream will grow slower because of this tax, and therefore I would expect there would be less Millstream drinkers in the future. That is bad, and here is why:
You and I, and probably everone reading this page are craft beer drinkers. We are out there everyday trying to get people to wake up and realize there is a great flavor in beer, and it is something to be enjoyed and not abused. In my mind, that is the best way to stop alcohol abuse, not taking our money and putting it into a ’special fund’. So what we actually need are many more Craft beer drinkers!
How about this Special Fund that this newly raised money will go into? I personally like to call it social engineering, but besides that, how is it fair? While its great to help drug addicts with their problems, it is entirely unfair to tax only beer. Many studies have shown that problem drinkers do not favor drinking beer. I think many of you reading this have seen what people ‘who want to get hammered’ drink, they drink cheap wine and hard liquor. Why aren’t our legislators raising the taxes on that? Because the people who drink their Fine Wine and Martini’s have more say in the Iowa Legislature than we lowly beer drinkers!
I think we all need to change that! I want everyone reading this to fire off a letter to your local representative telling them just what you think of this. This applies doubly so if you live in Coralville, since Senator Dvorsky is one of the main sponsors of the bill.
To find your legislator, go here, and type in your address. If you have never done this, you will be suprised at just how easy it is.
To end with, I want to quote a bit from a publication called the Back Door to Prohibition: The New War on Social Drinking published by the Cato institute. I think it underlines the dire threat that moderate drinkers are under if we do not stand up and let ourselves be heard.
“Excise taxes also unfairly force all drinkers to pay for the societal costs attributable to a small number of drinkers who abuse alcohol. The taxes are often passed under the justification that they’ll offset the negative externalities caused by excessive alcohol consumption — health care costs, the costs of policing drunken drivers and treating their victims, the costs of domestic abuse and physical violence caused by excessive drinking, and so forth. But common sense suggests that the addicts and alcoholics who contribute most to external costs are those least likely to quit the habit as a result of the imposition of an excise tax. Instead, the people most likely to change their habits because of higher taxes are moderate and social drinkers, a point the NAS study concedes: “[T]he most ‘cost-effective strategy to reduce underage drinking’ includes policies that produce their main effects not on underage drinking, but rather on the overall level of drinking in the population.” ”
Update: Here is a sample letter (right click and ’save target as’) that I have written for my local reps in Iowa City and Amana. Feel free to change and add in your own opinions (if you don’t work at a brewery you might want to delete my bit about that!)
3/22 Update: I have been watching to see who would be on the Ways and Means Committee. I think we should all contact them too, I’d like to see this get nipped in the butt before it goes any farther. Maybe next year they won’t even bring it up for a change.
Paul McKinley R-Lucas County (Knoxville-Pella)
Charles Larson R-Linn
William Dotzler D-Blackhawk
Joe Seng D-Scott
