Beer sales broadly have trended down while craft beer growth has continued, a big part of which is on-premise sales. It’s been a great buying local trend and small business growth story, and Pennsylvania bean counters now want a piece of that action.
The state’s Department of Revenue wants Pennsylvania breweries to start charging a 6 percent sales tax on all their taproom products — draft sales, growlers, six-packs, etc. LeHigh Valley Business reports that revenue officials are seeking the tax because of the now larger pool of customers breweries have after the state passed a series of liquor reforms in 2016 to accomplish just that.
Said a snarkier, CBB way, in 2016, Pennsylvania changed its approach to liquor sales to encourage industry growth, and having succeeded in doing so, it now wants to penalize everyone.
This long-con collection was actually going to start on Jan. 1, 2019, but the Brewers of Pennsylvania have been fighting it and have at least pushed it back until July 2019.
Impact of a 6 percent tax
Here are some brewery reactions from the LeHigh Valley Business:
“This is the single most concerning issue we’re facing right now,” said Rob Metzger, co-founder of Chatty Monks Brewing Co. in Berks County. “Sales tax is probably going to put some people out of business.”
For Chatty Monks, the sales tax on pints could amount to $25,000 or $30,000 per year, Metzger said. He and his partners have been talking about potentially changing glassware in their taproom to give consumers more beer for their money.
“In this world right now with so many different beers, the brewpub is a way to allow customers to come in and show them how your products are different,” said Ted Zeller III, general counsel for the Brewers of Pennsylvania, an industry trade group.
Brewery taprooms also have to compete with bars and restaurants, which sell a variety of brands but would not be required to levy a sales tax. Bars and restaurants, which hold retail licenses, pay taxes when they purchase beer at the wholesale level.
So if a bar is buying a $140 wholesale keg of beer from a distributor, it pays $8.40 in state sales tax. The state brewers association wants similar treatment. But the current state proposal asks the brewery to add 30 cents on each $5 pint sold. With each keg producing 120 pints, a taproom would be collecting sales taxes totaling $36, or about four times what bars and restaurants would pay on the same keg.