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Beer Institute touts economic benefits in fighting tax hike

2012_0927_Beer After a forum on the taxation of beer, The Beer Institute offered samples of its products to congressional aides at a reception in the rotunda of the Rayburn House Office Building. (The Hagstrom Report/Jerry Hagstrom)


By JERRY HAGSTROM

Fearing that that the lame duck session might lead Congress to consider an increase in taxes on beer as one solution to the so-called “fiscal cliff,” The Beer Institute on Thursday made the case to congressional aides that beer is taxed enough already, and then offered those who were 21 or older a sampling of their products.

“Beer is already making a great economic contribution to the country,” Beer Institute CEO Joe McClain said, noting that the industry creates 1.8 million U.S. jobs, $223 billion in economic activity and pays $44 billion in total taxes. The industry creates jobs for everyone from farmers growing hops, barley and wheat to servers in restaurants and bars, McClain noted.

“Beer is serious business. It accounts for more than half of the economic activity in the alcohol sector,” McClain added.

The industry has reason to be concerned that Congress might increase beer taxes. When Congress address the deficit in 1991, it doubled the federal excise tax on beer to $18 per barrel, which led to a loss of 60,000 jobs, McClain said.

Chris Thorne, the Beer Institute’s vice president for communications, noted that Congress had raised the excise tax on beer along with excise taxes on luxury goods, but later reduced the tax on the luxury goods but not on beer.

And beer is not recession-proof, Lester Jones, the Beer Institute’s economist pointed out, using a chart that showed that beer shipments declined during the recession and are only beginning to rise again. The “man-cession” of unemployed males in the current recession has been particularly bad for the beer industry, Jones said, because young men are prime consumers of beer.

2012_0927_BeerTax

Graphic showing “the most expensive ingredient in beer is taxes.” (The Beer Institute)

“Taxes are the most expensive ingredient in beer,” McClaln said.

Representatives of suppliers to the beer industry noted that farmers and bottle, cap, can and coating manufacturers all depend on the beer companies as customers.

“If taxes go up on beer, there will be less beer sold, and less beer means less need for our company’s hops, which means fewer farm contracts and fewer employment opportunities for all those people that put the great hop flavor into American beers,” said Alex Barth, president of John I. Haas Co., which provides hops to brewers.

The Haas company is headquartered in Washington, D.C. but grows most of its hops in the Pacific Northwest.

Although the decline in beer shipments has occurred simultaneously with increasingly national concern about obesity, McClain said that this has not come up as an issue in the beer industry. He said he believes obesity is a much bigger issue for the soft drink industry.

Jones said beer is “a very wholesome, natural product” and that about 50 percent of the beer sold in the United States is light beer, which is lower in calories.

The Beer Institute also released a poll of 1,000 likely voters which found strong opposition to increasing taxes on beer. Nine out of 10 voters in the poll agreed that “raising taxes on beer will mean working-class consumers will have to pay more,” the Beer Institute said.

The firm of Public Opinion Strategies conducted the poll but the margin error was not available.

The poll also found that self-identified “beer drinkers” are a larger proportion of the electorate than self-identified supporters of either the Tea Party or Occupy Wall Street movement, and were evenly split between Republican and Democratic parties.

The poll also showed that beer drinkers are more political than non-beer drinkers, the institute said, citing the following statistics:
  • 68 percent of regular beer drinkers say they discuss what’s going on in the presidential campaign with friends or co-workers;
  • 66 percent of regular beer drinkers say they are going to be watching the presidential debates, meaning they are more likely to watch presidential debates than to watch the World Series or an NFL game;
  • 25 percent say they will likely donate or contribute money to a political party, cause, or candidate running for public office; and
  • 14 percent (or one out of seven) beer drinkers say they will likely volunteer for a political party, cause, or work on the campaign for a candidate running this year.