Why Advocacy Matters
In Washington, D.C. and the Texas Legislature, politicians are writing and enacting laws that can have a profound impact on your business and our everyday lives as spirits consumers. It is up to us to make sure lawmakers are educated on how their actions will help or deter the ability to produce great spirits brands for consumers to enjoy. Advocacy is a team sport and we need your engagement with Spirits United. Your voice plays a critical role as lawmakers consider the issues that impact our industry and consumers.
Distilled spirits are enjoyed by millions of adult consumers responsibly every day. Collectively, we are joined together to support this great industry and promote the enjoyment of distilled spirits responsibly.
The United States imposes a huge federal excise tax (FET) on the sale of distilled spirits at a whopping $13.50 per proof gallon (A proof gallon is one liquid gallon of spirits that is 50% alcohol at 60 degrees F). Over fifty percent of the price of a typical bottle of distilled spirits reflects taxes and fees. This is a unique and excessive tax burden on the industry, especially for craft distillers who are usually small, family-run businesses.
In December 2017, Congress passed the Craft Beverage Modernization and Tax Reform Act, which creates a more fair and equitable tax structure for brewers, winemakers, distillers and importers of all beverage alcohol. The bill reforms the FET by:
- Establishing a reduced rate of $2.70 per proof gallon for the first 100,000 proof gallons of distilled spirits produced or imported annually.
- Establishing a rate of $13.34 per proof gallon for the next 22,130,000 proof gallons of distilled spirits.
- Keeping the excise tax rate of $13.50 per proof gallon for production in excess of 22,230,000 proof gallons.
However, this bill expires at the end of 2019. It is critical that we engage with our Members of Congress to ensure that this bill is extended or made permanent.
Market Modernization in the States
When Prohibition in the United States ended in 1933, states and localities were given the power to regulate the sale and distribution of alcohol, pursuant to the Twenty-First Amendment. However, many states still have ill-conceived and outdated laws limiting a consumer’s access to the spirits market.
We fully support proper regulations to ensure beverage alcohol is only consumed by those of legal drinking age.
Today, 43 states allow the sale of distilled spirits on Sundays. However, seven states, including Texas, prohibit the retail sale of spirits on Sunday. These laws are called “blue laws” and are antiquated restrictions intended to limit convenient consumer access to spirits based on Prohibition-era ideas. It should be up to the consumer, not the government, to buy spirits on a Sunday. It is our mission to enable consumers to make the ultimate choice of buying their preferred spirits on the day and at the location of their choice.
At the federal, state, and local levels, burdensome taxes are applied to spirits that are not required of other industries or consumer products. When all of these taxes and fees are stacked on top of each other, this equals more than 50 percent of the retail price of a typical bottle of distilled spirits going toward a tax or fee of some kind in most states.
There is no evidence an increase on taxes deters those who abuse alcohol. High taxes on distilled spirits, however, is a significant burden on purchasers of distilled spirits who consume in moderation and responsibly. These taxes impact the local economy and jobs and often cause consumers to take their business to other states.
Trade & Tariffs
Free trade and unfettered access to international markets are critically important for the healthy growth of any industry, including the distilled spirits industry. Forty-five states exported $1.7 billion worth of U.S. spirits in 2018. However, tariffs and other measures that restrict free trade result in serious consequences for our industry. For example, the retaliatory tariffs imposed by the European Union (EU) on the United States caused a 17.6% decline in whiskey exports between July 2018-April 2019 compared to July 2017-April 2018.
The growth of American whiskey and Bourbon and the demand for these great products around the world is a great American success story. Engagement with Spirits United will help us educate lawmakers to understand the importance to resolve the on-going trade disputes with Europe, China and Turkey.