The Thirsty Beagle: Alcohol tax-hike bill passes House subcommittee

Friday, February 17, 2017

Alcohol tax-hike bill passes House subcommittee

Happy Friday beer fans!

There was news from the state Capitol this week as House Bill 1686 -- a bill that would drive up the excise tax on beer and liquor -- passed a House subcommittee by unanimous vote.

The measure, which would increase the excise tax on a barrel of beer from $12.50 to $45, passed the House Appropriations and Budget Finance Subcommittee by a vote of 8-0.

The bill would also increase the excise tax on spirits, from $1.47 per liter to $3.50 per liter.

As I wrote last week, HB 1686 is especially troubling to Oklahoma craft brewers and distillers because they would be the ones to initially take the financial hit to cover the increased excise tax.

As groups that oppose the bill argue, that cost would eventually end up landing in the consumer's lap in the form of higher prices on beer and spirits.

Proponents of the bill by Rep. Harold Wright say it is needed because many retailers of low-point beer (read: convenience stores and gas stations) have not been properly remitting sales tax on beer. This takes money out of the state's budget, they argue.

HB 1686 would exempt beer and spirits from sales tax.

As bill opponents have pointed out, the real issue is retailers who do not pay sales taxes properly -- a tax collection/enforcement issue -- and it is not fair to simply shift the burden to manufacturers and distributors of beer and spirits.

Opposition to the bill is strong, and interestingly enough, some who were on opposing sides on State Question 792 now find themselves pulling the rope in the same direction.

On its Facebook page, the Retail Liquor Association of Oklahoma stated the group opposes HB 1686, suggesting it would give Oklahoma one of the highest alcohol excise tax rates in the nation.

"Although Rep. Wright's bill does eliminate sales tax on spirits and beer, the increase in excise tax results in significantly higher prices on the majority of spirits and beer sold in Oklahoma," the post states.

Beer Distributors of Oklahoma board Chairman Mitch Zaloudek released a statement describing the bill as "simply another revenue grab that the taxpayers will pay for."

"Representative Wright’s legislation ... is an anti-consumer measure that will raise the price of beer on Oklahomans and is a slap in the face to Oklahomans who approved SQ 792 last November," Zaloudek wrote.

Meanwhile, the advocacy group Modernize Oklahoma -- a spin-off pro-SQ 792 group -- argued that the bill would "cut the legs out from under Oklahoma’s emerging local craft beer and spirits community."

"HB 1686 is a massive tax hike on alcoholic beverages that will dramatically increase the cost of beer and liquor in Oklahoma. If it is passed, it will encourage consumers to shop out-of-state, where alcohol will be considerably cheaper," Modernize Oklahoma Executive Director Alex Weintz said.

The bill has now been forwarded to the full Appropriations and Budget Finance Committee.

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