Sunday, February 22, 2009

Mistakes Were Made

I wrote my last post under the following misconceptions:

-Oregon breweries pay Oregon excise taxes on all the beer they sell, including beer shipped to other states.
-Oregon excise taxes don't apply to beer shipped into Oregon from elsewhere.

Both of those statements are false. Here's how it really works:

-Oregon breweries pay Oregon excise taxes on beer they sell in Oregon.
-Wholesalers (aka distributors) pay Oregon excise taxes on beer shipped into Oregon.
-Wholesales pay the excise taxes of other states where Oregon beer is sold.

As such, Oregon beer won't be taxed at higher rates than out-of-state beer. Instead, the price of beer to consumers will simply increase across the state. If you assume resale markups of 30% for wholesalers, 30% for liquor stores and 350% for bars, an excise tax increase of $49.61 per barrel (the tax would increase by that amount, not to that amount as I had previously thought) will result in consumer price increases of $1.52 per 6-pack and $1.17 per draught pint.

If you're a brewery manager, how do you lessen the blow? Simple: focus on selling really strong beer to Oregon residents. Excise taxes apply to volumes of beer, not volumes of alcohol, so the amount paid on a 12-oz glass of 10%-abv barleywine is less than the amount paid on a 16-oz glass of 6%-abv pale ale. The same holds true for 40-oz bottles of St. Ides vs. 6-packs of Miller Lite. You can probably see where I'm going with this.

If you're a problem drinker, how do you lessen the blow? Simple: switch from beer to Five O'Clock Vodka. If you hadn't already done so, welcome to the next level of alcoholism.

As a responsible beer enthusiast, how do you lessen the blow? Aside from moving to another state, there isn't much you can do. Even though you're not a target for behavior modification through taxation because your relationship with alcohol isn't harmful to yourself or anybody else, one option is to drink less beer. Another option is to give more money to the government. Otherwise, I hope you like barleywine.

1 comment:

Jeff said...

The third option would be to brew your own beer! What an awesome way to lessen the tax blow! STICK IT TO THE MAN!