Tax battles: New Mexico brewers could face the highest excise taxes in the nation

The land of enchantment could cast a wicked spell over craft beer.

It feels like you’re working for the government sometimes, right? Local, state and federal bodies are always in need of more money. Your money. In between twirling their monocles and writing checks they can’t pay, it appears our government representatives around the country are noticing the success of craft breweries in America and wanting in. It doesn’t stop there: Advocacy groups are pointing at craft beer as a sin-type, taxable business category, holding out their hands and saying, “gimme.”

Last week, we reported that Michigan State Rep. Thomas Hooker had introduced House Bill 5873, which if passed would raise taxes on beer from $6.30 to $21.70 per barrel, a whopping 244 percent increase (which fortunately landed with a ‘sobering thud’). Hooker cited state alcohol prevention initiatives as the reasoning. Now, we bring you a similarly outrageous idea from New Mexico. A proposal promoted by a group called Alcohol Taxes Save Lives and Money is calling for an across-the-board increase on alcohol excise tax on the wholesale level, including beer, wine and spirits. From the Albuquerque Journal:

The group estimates it would boost state revenues by $154 million annually and help cover some of the public costs associated with excessive drinking, such as related police hours, court services and medical treatment.

Even at the higher rate, “it’s a minuscule fraction of what it should be,” said the group’s director, Peter De Benedittis.

Local brewers say the proposed alcohol tax increase would raise state beer excise taxes to the highest rate in the nation. In fact, it would be more than 2.5 times higher than the second-highest rate in the United States (the highest now is Tennessee). Alcohol Taxes Save Lives and Money is pushing the governor on the issue. If you’re willing to risk an Indiana Jones-style face melting, just look at these insane numbers:

Rates vary depending on a brewery’s production volume, but New Mexico’s microbreweries currently pay 8 cents per gallon in state excise tax for the first 10,000 barrels sold. The proposed hike would raise that to $2.75, the equivalent of 25 cents per drink, according to the Alcohol Taxes group.

That means a brewery selling 4,000 barrels a year (or 124,000 gallons) would see its taxes jump from $9,920 to $341,000.

Feel free to take a moment, pick your jaw off the ground and/or push your eyeballs back into their sockets. Gov. Susana Martinez has said she isn’t going to raise taxes, but we found that people rarely do what they say. In response, independent breweries all over New Mexico are rightfully making noise. Read the entire story right over here. It’s a great piece of writing by Jessica Dyer.