NCPA - National Center for Policy Analysis

Beer Excise Tax Awaits Changes

November 13, 2013

Today, many politicians, brewers, trade groups and consumers are seeking relief from the excise tax on beer. Two competing bills currently pending in Congress -- creatively titled the BEER Act and the Small BREW Act -- would reduce the tax in different ways. While neither bill is perfect, enacting either one would be a victory for the beer industry and consumers. However, for long-term reform the best course of action is for Congress to repeal the excise tax altogether, say Michelle Minton, fellow in consumer policy studies at the Competitive Enterprise Institute, and David Scott, a graduate of the Wake Forest University School of Law  and  practicing attorney in Philadelphia.

  • The Brewers Excise and Economic Relief Act (BEER) Act would halve the standard excise tax rate for beer sold in the United States, from $18 to $9 per barrel. Based on 2012 numbers, the BEER Act would result in tax savings of $1.68 billion a year.
  • The Small Brewer Reinvestment and Expanding Workforce (Small BREW) Act maintains the current $18 per barrel excise tax rate for beer, but lowers the reduced rate for small brewers even further to $3.50 per barrel for the first 60,000 barrels produced and to $16 per barrel for barrels 60,001 through 2 million.
  • Based on 2012 sales data, the Small BREW Act will result in tax savings of $65 million a year, all of which would go to brewers producing less than 6 million barrels a year.

While the BEER Act benefits the whole industry and the BREW Act benefits only the craft beer industry, the results of either bill becoming law would be greater profits for businesses and their shareholders, more advertising, business expansion, job growth and possible lower prices for consumers. Given that both bills face an uphill fight for passage, the industry would be wise to put its whole weight behind just one. Because it benefits the industry as a whole -- and benefits all brewers to a greater degree than the Small BREW Act -- the BEER Act is the more likely and better option to receive such industry-wide support.

But there is another, better option -- a full repeal of the federal excise tax on beer. Eliminating the federal excise tax will help produce all of the job creation and business expansion benefits of the BEER and Small BREW Acts to an even greater degree. It will also increase personal freedom by making a significant step toward eliminating controls on alcohol consumption that have dominated the alcohol industry since Prohibition's repeal.

Source: Michelle Minton and David Scott, "BEER and Small BREW Can Be Good for You," Competitive Enterprise Institute, October 31, 2013.


Browse more articles on Tax and Spending Issues