Alcohol Industry Excited About 2018 Tax Cuts

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April 19, 2018

Posted in Moonshine

Many alcohol producers will be toasting to Trump’s new tax cuts when ringing in the New Year. A provision to the tax bill passed late last month slashed taxes on alcoholic beverages like beer, wine and spirits. According to an article written by “CNN Money”, the two-year reductions will save the industry an estimated $4.2 billion over that time. Liquor companies were actually among the biggest winners of the cuts. The rate on the first 100,000 gallons made or imported will fall from $13.50 to $2.70 each gallon. The Distilled Spirits Council, the trade group for major liquor companies such as Diageo and Bacardi, praised the tax cuts and claimed they were the biggest alcohol tax reforms since the Civil War. The council also went record to say “we will believe this cut will encourage companies to invest back into their business while also raising salaries for employees”.

However, not everyone will be popping the corks in celebration as advocates are concerned the reductions will lead to excessive drinking and more drunken related accidents. These critics see only despair coming out of the cuts. “It’s not helpful in terms of fighting drunk driving,” J.T. Griffin of Mothers Against Drunk Driving. Public health experts told the website lower tax rates could cause something of a major crisis. They likened taxes on booze to the regulations on cigarettes, which have soared over the years in a bid to tamper smoking. “The public health ramifications of this continue to be invisible to policymakers,” says a spokesman at John Hopkins University’s Center on Alcohol Marketing and Youth. Yet a November study by the Urban-Brookings Tax Policy Center found higher alcohol taxes weren’t a rock-solid solution to drunken driving.

Alcohol companies championed the cuts as the tax bill has been floated over the last two months, claiming that the beverage alcohol industry remains one of the most regulated industries in America. “Brewers, winemakers and distillers pay state, local and federal taxes on their production. Federal excise taxes, which are regressive taxes, and simply too high,” said Distilling Spirits Council. In 2017 alcohol taxes revenues were projected to amount to $9.94 billion, according to an analysis by research firm Statista. This number was expected to go as high as $10.41 billion by 2022.

Sen. Rob Portman (R-Ohio) sponsored the provision, claimed that he doesn’t think a slashed rate will lead to excessive indulging, instead arguing, it would help smaller breweries and alcohol companies. Data from the Brewers Association, which represents independent and small craft manufacturers in America, tallied 5,301 breweries operating in 2016. That’s a 250% increase from a decade ago, when there were just 1,511 in the U.S. These are the companies that will get a big benefit from this cut, seeing drops from $7 to $3.50 a barrel. Savings like this has made Philip McDaniel, a brewer in Florida, excited to reinvest an estimated $150,000 in 2018 savings back into the company. He went on to say “Hopefully they’ll see the growth, and perhaps they will have the wisdom and the heart to extend it another two years.” That’s been the hope of GOP lawmakers, who also permanently slashed the corporate tax rate from 36% to 21%. The savings, they argued, would be passed on to wages and capital investment. Critics of the cuts are worried, however, that any tax savings will simply line shareholders’ pockets.

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