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Beer Industry Thirsts for Tax Cut of Its Own

Rollback, Left Out of Stimulus Package, Would Cut Cost Down to $9 Per Barrel

The brewing industry is hoping Congress’ thirst for cutting taxes will help make it a little cheaper for people to buy a six pack and in turn give the beer business an economic shot in the arm.

A consortium of brewers, wholesalers and retailers is once again calling on Congress to cut the beer tax in half, from the current rate of $18 a barrel to the pre-1991 tax of $9. The tax cut would slice about $1.25 off the cost of a case of beer, according to industry officials.

But the rollback is not included in President Bush’s economic stimulus plan currently working its way through Congress, leaving the beer industry and its allies to scout beyond the legislative horizon to try to pass this tax cut elsewhere in 108th Congress.

The industry has been lobbying for 10 years for the rollback without success, leaving a person to believe the failure would be enough to drive anti-beer tax advocates to drink.

But Sen. Rick Santorum (R-Pa.), whose state is home to countless breweries — including Yuengling, America’s oldest — said he has not given up hope.

“My thought is I have sponsored a lot of bills that are not going to pass anytime soon,” said Santorum, who introduced legislation to roll back the tax in the Senate.

“But if another tax bill comes around or some other mechanism comes around, if we are looking at things to clean up the code or trying to focus on some other simplification or inequities such as a correctional bill, then I certainly would try to put it on.”

So far, though, it appears House Members are thirstier than their Senate counterparts. Santorum is the only person who has inked his name onto a bill calling for the rollback, which the Pennsylvania Republican introduced on April 8.

Across the Capitol, 134 Members have co-sponsored similar legislation that was offered on March 18. In fact, Reps. Phil English (R-Pa.) and Earl Pomeroy (D-N.D.) co-authored a “Dear Colleague” letter earlier this year urging Members to support the rollback.

English and Pomeroy told Members the tax “has had a negative effect on the brewers and small businesses that produce and sell beer,” adding that it “also puts unnecessary pressure on the pocketbooks of average working Americans who consume ‘America’s beverage.’”

To emphasize this point, the industry estimates that 31,000 jobs have been lost since the tax went into effect. Even more to the point, the Beer Institute — the brewers trade association — claims that “more than half of the beer purchased is by families with incomes of $45,000 or less.”

“These are young, average Americans, many with kids they hope to send to college while trying to save to buy a home,” according to the Beer Institute’s Web site, rollbackthebeertax.com.

In the meantime, other taxes that passed the same year the beer tax was doubled have been repealed including taxes on furs, private planes and jewelry.

Santorum argues it is only fair to cut back the beer tax, which average Americans must shoulder.

“It is a regressive tax for low- to moderate-income individuals,” he said.

When the time comes for the repeal, David Rehr, president of the National Beer Wholesalers Association, said they will be prepared.

“We are keeping the glasses cold and we are ready to raise an ice-cold beer,” Rehr said in an interview.