Seaton moves to triple taxes on craft beer

By
Suzanne Downing
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5

FIRST THEY CAME AFTER OIL BARRELS, NOW IT’S BEER BARRELS

Look out, craft brewers. The Alaska House of Representatives is about to skim some foam off your profits.

Since 2002, Alaska’s micro-breweries have gotten a tax break from the State of Alaska to help jump-start an industry that in Alaska had lagged behind other states. The State has incentived other industries, such as oil and gas, and this is not dissimilar.

The craft brewers pay one one third of the taxes that are levied on beer coming from large manufacturers out of state.

With the tax breaks, craft beer makers flourished, bringing skilled employment and manufacturing to a state that sorely needs private sector manufacturing jobs.

The sector has grown to 39 microbrewers around the state, even in such unlikely places as Hoonah, Gakona, and Fox.

But the tax breaks enjoyed by craft brewers are threatened.

What is now 35 cents on a gallon of beer could more than triple to $1.07, if Rep. Paul Seaton of Homer has his way.

Seaton, who is chair of House Finance, requested that the Labor and Commerce Committee consider legislation to repeal the reduced tax rate, which applies to the first 60,000 barrels of beer sold by craft brewers.

That Labor and Commerce hearing is today at 3:15 pm at the State Capitol.

The additional revenue to the state would be $2.6 million, Seaton argues.

“Amending and updating this statute would create a level playing field for the alcohol industry,” Seaton said in his memo to the committee. By doing so, it would help out-of-state brewers better compete with in-state Alaska brewers.

But craft brewers disagree. They don’t have the economies of scale like large industrial brewers do. A tripling of state taxes will affect their business decisions and curtail growth.

“In Alaska, we already have alcohol laws that are large barriers to entry for small breweries,” said one craft brewer who asked to remain anonymous. “Craft brewers around the country make money off of tap rooms because distribution is really expensive for those without the large volumes. Here in Alaska, distribution for a small brewer is all but impossible because of our distances and costs, but if you triple the tax, it’s going to be impossible to make the bottom line turn black. Our state laws already make it hard just to operate tap rooms.”

Apparently, in the House Majority organization, “if it moves, tax it,” continues to be the guiding principle.

Craft brewers in Alaska — all of whom would be impacted by Seaton’s requested bill — include these:

  • 49th State Brewing Company – Healy
  • Alaskan Brewing Company – Juneau
  • Anchorage Brewing Company – Anchorage
  • Arkose Brewery– Palmer
  • Baranof Island Brewing Company – Sitka
  • Bearpaw River Brewing Company – Wasilla
  • Bleeding Heart Brewery – Palmer
  • Broken Tooth Brewing – Anchorage
  • Denali Brewing Company – Talkeetna
  • Devil’s Club Brewing Company – Juneau
  • Gakona Brewery & Supply Company – Gakona
  • Gold Rush Brewery – Skagway
  • Glacier Brewhouse – Anchorage
  • Grace Ridge Brewing – Homer
  • Haines Brewing Company – Haines
  • Homer Brewing Company – Homer
  • HooDoo Brewing Company  – Fairbanks
  • Icy Strait Brewing – Hoonah
  • Kassik’s Kenai Brew Stop – Nikiski
  • Kenai River Brewing Company – Soldotna
  • King Street Brewing Company – Anchorage
  • Kodiak Island Brewing Company  – Kodiak
  • Last Frontier Brewing Company  – Wasilla
  • Midnight Sun Brewing Company – Anchorage
  • Odd Man Rush Brewing – Eagle River
  • Resolution Brewing Company – Anchorage
  • Seward Brewing Company – Seward
  • Silver Gulch Brewing & Bottling Company – Fox
  • Skagway Brewing Company – Skagway
  • St. Elias Brewing Company – Soldotna
  • Cynosure Brewing – Anchorage

5 COMMENTS

    • Like the oil companies that went out of biz because they depended on the tax breaks. People design their biz plan around tax breaks and subsidies.

      • With that logic- Start cutting off welfare checks, fuel subsidies, “affordable healthcare”, etc.

        I like it, too bad it won’t happen. Those on the public teat will grow angry and protest and whine and cry and break things. It seems to be their M.O. these days.

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