New bill hopes to alter Tennessee beer tax

New bill hopes to alter Tennessee beer tax

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By ALEXIS ZOTOS
6 News Reporter

KNOXVILLE (WATE) – A new bill could mean last call on increases in Tennessee's beer tax.

Tennessee has the highest beer taxes in the nation at 17-percent. Alaska has the second highest at just five-percent.

The goal of the Beer Tax Reform Act of 2012 is to alter the way beer is taxed, in hopes to make it cheaper to buy and cheaper make. And ultimately the bill's sponsors hope to make Tennessee a more attractive state for  breweries.

"It's not very profitable currently for brewers to enter this market," said Jeremy Walker, the craft beer manager for Eagle Distributing.

As a distributor, Walker sees the effect of Tennessee's beer tax on all parts of the industry.

"As cost of goods increase, the tax is going to increase, so it's increasing at a rate that's sky rocketing. Overall beer sales in the state of Tennessee have declined, while the revenue from the beer sales have increased by 30 percent," Walker explained.

Put simply, as the price of beer goes up, so does the tax rate.

"Sierra Nevada elected not build their brewery here because, one reason was our high tax rate. It's cheaper for brewers to send their beer elsewhere," said Walker.  

In other states, beer is taxed at a flat rate based on volume, not price. The bills co-sponsor Rep. Cameron Sexton (R-Crossville) says it's hurting the state.

"There are other beer crafters in America that bypass Tennessee, so we're losing that business as well, and were hurting the startup companies as well," Rep. Sexton told 6News in a phone interview.

Rep. Sexton says the bill is revenue neutral. Meaning local governments that receive the money from the 17-percent beer tax won't see that funding decrease.

"We're still going to have the highest beer tax in the nation," Walker said. "We'll still have the highest. It just halts the sky rocketing rate of our taxes.

And making sure beer prices don't continue to rise is what makes the customers happy.

"I like my beer prices right where they are," Chris Weathers, a customer at Barley's Taproom.

The bill's sponsors, State Rep. Sexton, and State Sen. Brian Kelsey (R-Germantown) along with dozens of supporters from the beer industry are hosting an informational rally at Barley's Friday February 15.

Walker says the hope is to raise a grassroots effort for support of the bill.

"The end person is the consumer," he said. "They're the ones affected most by it."

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