NCPA - National Center for Policy Analysis


October 18, 2005

Congress considers beer a luxury, but not mink coats, private jets or yachts says the Heartland Institute. In 1990, President George H.W. Bush and Congress raised a host of excise taxes on "luxury" items, a list that included beer, even though the main purchasers of beer are lower- and middle-income consumers. Fifteen years later, the taxes on expensive cars, fur coats, jewelry, yachts and private airplanes have all been rolled back, but the beer tax remains.


  • In 1990, the federal excise tax on beer doubled from $9 to $18 a barrel.
  • According to the Beer Institute, taxes make up an astounding 44 percent of the retail price of beer.
  • The beer industry estimates the excise tax increase resulted in the loss of nearly 60,000 jobs in brewing, distributing, retailing and related industries.
  • If the beer tax were rolled back to its 1990 level, the federal government would still collect almost $3.7 billion in excise taxes and the industry would pay $21 billion in other federal, state and local taxes.

Earlier this year, Sen. Rick Santorum (R-Pa.) introduced legislation to roll back the beer excise tax. He says the tax burden on beer is far higher than the average consumer good in the American economy. As a result of this tax, the government collects approximately seven times more in beer taxes than the nation's brewers make in profits.

A majority of Congressmen -- 240 -- signed on as sponsors of legislation to roll back the beer tax in the 108th Congress, but lack of support in the Senate kept it from advancing.

Beer industry representatives hope Santorum's bill will spark a serious push to reduce the tax in the months ahead. They also hope the federal legislation sends a message to state lawmakers to hold off on further state beer tax increases.

Source: Steve Stanek, "Congress Considers Beer a Luxury - But Not Mink Coats, Private Jets, or Yachts," Heartland Institute, Budget and Tax News, Vol. 3, No. 8, September 2005.


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