Yazoo Brewing Co. of Nashville and Calfkiller Brewing Co. of Sparta, Tenn., will debut a new batch of beer Monday that highlights the Volunteer State’s dubious status as the nation’s highest taxer of beer. If you are thirsty for beer tax reform, fill your glass with “The Beacon: A Tennessee High Tax Ale,” a creation guaranteed to be “oppressively refreshing.”
While craft brewing is one of the nation’s fastest-growing industries, Tennessee craft brewers are faced with punitive tax policy – an odd wholesale tax based on price that results in a compounding effective tax rate that is 12 percent higher than even No. 2 Alaska, and ratchets higher every year with inflation. The tax results in brewers’ taxes and consumers’ prices rising higher, higher, higher.
This fact inspired Yazoo and Calfkiller to “cut the red tape” and “pop the top” on Tennessee’s guaranteed highest-tax ale.
“The world has changed — Tennessee has changed — a great deal since the wholesale tax was established in 1954,” said the Sergio Brothers of Calfkiller. “In addition to higher taxes, this has a detrimental effect on economic development and consumer choice.”
Even though Nashville’s Yazoo Brewery is based in Tennessee, it is much more profitable for them to truck and sell its products to customers in other states than to pay the state’s $37 per barrel tax. Breweries often ship their products straight through Tennessee but don’t stop at warehouses there, venturing on instead to places such as Arkansas ($7.51) or Mississippi ($13.23).
“It’s time to fix the beer tax to reflect the modern marketplace, which includes growth of craft brewers, to encourage rather than discourage economic investment,” said Linus Hall, owner of Yazoo. ” The Sergios and I both have been frustrated by the effects this tax has had on our ability to grow, so we thought what better way to bring attention to it than to create a unique style of beer to Tennessee — the Tennessee High Tax Ale — while also making a statement about the future of this industry.”
Appearing in the general assembly Tuesday with votes in the House Local and Senate State and Local Committees is the Beer Tax Reform Act of 2013, sponsored by Rep. Cameron Sexton (R-Crossville) and Sen. Brian Kelsey (R-Germantown). The legislation will change Tennessee’s tax on beer to a more business friendly volume-based calculation— taking the heat off small businesses from Memphis to Bristol.
A coalition of statewide supporters has emerged to back the reform proposal, including the state’s large distributors, crafter brewers and consumers. The group has held large rallies in Memphis, Nashville, Chattanooga, Knoxville and Tri-Cities. For campaign updates, follow Yazoo @yazoobrew, the statewide campaign, @fixthebeertax, and Calfkiller @calfkillerbeer.