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Tax cut on alcohol likely to benefit big players more than small brewers

Tax cut on alcohol likely to benefit big players more than small brewers

Experts and industry advocates seem to disagree on the claims that the recent tax cuts on alcoholic beverages would give a boost to independent brewers. The GOP tax bill, passed by the Congress in December 2017, slashed taxes on alcoholic drinks, including wine and beer. Prior to the new law, small brewers paid $7 per barrel in tax on the first 60,000 barrels, while big brewers and importers were levied a tax of $18 per barrel on their first 6 million barrels. Now, craft brewers’ tax amount reduced to $3.50 on the first 60,000 barrels, while all other brewers would attract $16 per barrel on their first 6 million sales.

Similarly, the tax rates for all liquor, produced and imported domestically, stood at $13.50 per gallon before the new package. The revised rates cut the amount to $2.70 per gallon for the first 100,000 gallons produced or imported. Although all tax cuts are set to expire at the end of 2019, Republicans have plans to extend most of these tax breaks.

The experts expect the tax cuts to benefit large companies while they doubt if small brewers will be able to reap the benefits of tax reforms. According to Adam Looney, a senior fellow at the Brookings Institution, the bill will not offer much benefit for small alcohol producers. On the contrary, big players are likely to earn huge financial rewards by exploiting the possible loopholes that the new bill will offer in what constitutes a “small” or “craft” brewery. Congress’ Joint Committee on Taxation estimates that the reduction in taxes will save the industry and will cost the government around $4.2 billion over a period of two years.

A threat to public health

In addition to revenue loss to the government, critics are also concerned about the threat the new bill poses to the public health. A recent study linked the tax reduction to the increased alcohol consumption in the country. Dr. Timothy Naimi, an associate professor at the Boston University School of Medicine, advocated for elevating the cost of a drink by 10 percent as a solution to decrease alcohol consumption by 5 percent to 6 percent. “For people who are drinking a lot, it has a surprisingly big impact on consumption and related harms…Raising taxes could help solve state budget problems and is a great way to raise revenue. A lot of people would cast it as a win-win,” he said.

The decrease in consumption, according to the author, could help minimize health care costs as well as control alcohol-related car accidents and other issues. Overall, the researchers made a compelling case to influence lawmakers to increase excise alcohol taxes in order to increase gains on state revenues while reducing it potential consequences on health. In the wake of rampant alcohol use in the U.S., these recommendations make a lot of sense.

Americans battle alcohol abuse

Nearly 50 percent of Americans aged 12 or older (136.7 million) were current alcohol users in 2016, suggested the National Survey on Drug Use and Health (NSDUH). It included 65.3 million and 16.3 million binge and heavy drinkers, respectively. According to the Centers for Disease Control and Prevention (CDC), the U.S. reports nearly 88,000 alcohol-related deaths in a year. While the government is doing its job, people with alcohol addiction should be ready to seek voluntary treatment to lead a sober life.

Sovereign Health is one of the leading alcohol addiction treatment centers in the U.S. that offers a range of evidence-based treatment for substance use disorder (SUD). Call at our 24/7 helpline number 855-683-9756 or chat online for more information on our multiple state-of-the-art alcohol treatment centers in different parts of the country.