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Brewers’ guild opposes proposed tax hike

January 26, 2019

SCOTTSBLUFF — A bill recently introduced in the Nebraska Legislature could have brewers, and a lot of other people, crying in their beer.

The purpose of LB 314, introduced by State Sen. Tom Briese of Albion, is to provide property tax relief and bolster funding for K-12 education.

The 76-page bill goes into great detail on what items will be subject to property taxation and also how the state will implement an online internet sales tax.

What raised concerns among people in the brewing and wine making industry was a provision that would sharply increase the sales tax per gallon on alcohol production from local breweries, wineries and distilleries.

The current 31 cents per gallon on beer would increase to $1.38, an increase of 345 percent. For alcohol and spirits, the current $3.75 per gallon tax would shoot up to $12.28, a 227 percent increase.

Wine production, now taxed at 6 cents a gallon, would go up to $2.62, a 4,200 percent increase.

The brewing of craft beers has been growing in Nebraska, although the industry is still in its formative years.

Andrea Margheim, director of operations for Flyover Brewing Company in downtown Scottsbluff, is one of the bill’s many opponents.

“Nebraska already has the seventh highest excise tax in the nation when it comes to beer,” she said. “The brewers’ guild thinks that’s as high as we need to be. This kind of increase would just make us the highest in the nation.”

Margheim said in Colorado, major brewers like Coors and Anheuser-Busch can afford to absorb whatever tax rate is implemented on beer. That’s not the case in Nebraska.

“Nearly all the breweries in the state are small, privately owned, local business operations,” she said. “We can’t afford tens of thousands of dollars in tax increases. We support local and buy local whenever we can. Our brewery alone has created almost 30 jobs.”

Others see the proposal in a different light. Monument Prevention Coalition is a network of community partnerships working in Scotts Bluff County to prevent and reduce underage drinking and excessive alcohol use.

Director Lanette Richards said the group is supporting LB 314 when the overall cost of alcohol abuse is considered.

“Automobile accidents, DUI arrests, the loss of lives and the health risk need to be considered,” she said. “Nebraska is seeing a rise in alcohol abuse and statistics show that could be linked to more instances of cancer.”

Richards said the tax doesn’t affect producers directly, as the costs are usually passed along to the consumer.

She said the current tax on a 12-ounce can of beer is about 2.9 cents. There hasn’t been an alcohol tax hike in the state since 2003 and actual taxes paid by the consumer are small.

“We don’t think the purpose of this bill is to shut down the alcohol industry,” Richards said. “We think it will help cut down on the excessive use of alcohol for the health and safety of our communities. This is a big public health concern.”

LB 314 was assigned to the Revenue Committee, where it awaits a hearing.

“We can listen to it and think about it, but it’s doubtful it will get out of committee for a floor debate,” said State Sen. John Stinner. “I’m not somebody who’s going to increase taxes on anybody, whether it’s cigarettes or alcohol.”

But Stinner said updating the tax code that applies to sales tax exemptions might be a partial solution to bringing more revenue into the state.

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