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08 June 2009

Beware of Big Government

According to statistics put together by the Beer Institute, an industry body, the U.S. beer industry, comprised of large and small brewers, beer importers, and beer distributors, provides nearly 138,000 well-paying jobs in every congressional district in the country.

Employees earn more than USD 9.6 billion in wages each year along with solid benefits. These companies operate more than 4,800 facilities, including breweries and warehouses, across the country.

At a time when manufacturing operations continue to move overseas and critical sectors of the domestic economy struggle, the American beer industry remains a positive economic force.

The beer industry helps support more than 1.7 million jobs in this country, and beer sales are an important contributor to the success of over 520,000 restaurants, convenience stores, pubs, supermarkets, and other retail establishments.

The total direct and indirect economic activity is valued at nearly USD 190 billion each year.

The Beer Institute warns that proposals to triple or quadruple the excise tax will have severe economic impacts on the industry.

Just tripling the current beer tax will cost the country jobs at a time when the national unemployment rate is the highest it has been since 1983.

The Beer Institute estimates that a 300 percent increase in the excise tax on beer will result in 179,000 lost jobs, USD 5.9 billion in lost wages, USD 18.9 billion in lost economic output, and USD 2.7 billion in lost federal, state, and local revenues from decreased production and consumption. The impacts of these tax increases may be even greater for small businesses as microbreweries and brewpubs will be hit with significantly larger tax bills. Many of these smaller companies may be forced to close.

An excise tax is designed to collect additional monies as volumes increase over time. The growth in beer industry volumes have added more than USD 800 million in additional federal revenue since 1991 when the beer excise tax was doubled.

In 2008, taxes on the beer industry at all levels of government added up to more than USD 41 billion. The total tax burden of federal, state, and local taxes on beer are more than 41 percent of the retail price paid by consumers.

Even without explicitly saying so, the Beer Institute thinks that the tax load on beer is high.

But in a desperate scramble for additional income streams, politicians are even reviewing an excise tax on sugar-sweetened beverages, which would affect a variety of carbonated and non-carbonated beverages, such as non-diet soft drinks, fruit and vegetable drinks, functional drinks, iced teas and iced coffees, and flavoured milk and dairy drinks.

Oh dear. The Jacobins are on the march again.

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