Tennesseans who enjoy specialty craft beers may not even realize they're paying the highest beer tax rate in the country.
Tennessee's beer tax rate is 17% followed by Alaska, which has the second highest at 12%.
The local wholesale beer tax is based on beer price rather than volume of beer sold, which ultimately hurts local craft brewers like Yazoo Brewing Company in Nashville.
“What happens is more taxes get taken out of a typical six pack of Yazoo or other craft beers here in Tennessee,” explained Linus Hall, owner of Yazoo Brewing Company, “Instead of having this tax based off of price, have it just based off of volume and so a six pack of craft beer would have the same tax as a six pack of a lower priced beer.”
Hall and other craft brewers have created a movement calling for tax reform.
“Tennessee needs to have a fair tax policy, instead of penalizing the higher priced beers,” Hall told Nashville's News 2, adding, “We need [a] tax policy that supports local businesses and supports local brewers.”
Not only is this high beer tax rate a problem for local craft brewers, it's also costing consumers more to purchase craft beers at retailers.
“Every year that we've had to raise our prices with inflation, this 17% tax multiplies every single price increase that we do,” Hall said. “If we raise our price by only 10 cents a six pack, by the time it gets on the shelf it might be 50 or 60 cents more.”
Brewers like Hall believe the high beer tax is also keeping certain beers out of Tennessee.
“It makes an environment that while there's a lot of breweries trying to start up it makes it very difficult for them to be successful and expand,” Hall said. “It really keeps other breweries from outside of the state from wanting to distribute here.”
The Beer Tax Reform Act of 2013 was introduced in the Tennessee General Assembly by State Representative Cameron Sexton of Crossville and State Senator Brian Kelsey of Germantown.
The current beer tax was enacted in 1954.
For more information, visit FixTheBeerTax.com.