Responses to Misleading and Inaccurate Beer Industry Propaganda on Excise Taxes

Beer Industry Myth: Forty‐four percent of the retail price of beer is now consumed by taxes. Consumer and Public Health Reality: The ʺ44 percentʺ calculation deceptively includes sales tax, federal income and payroll taxes, state and local income, payroll and other levies. The federal excise tax on beer amounts to only about a nickel per drink ‐‐ less than seven percent of the average price of a six‐pack. Moreover, the relative value of the tax on beer has declined considerably as the value of the excise tax has not kept pace with inflation. For example, at todayʹs rate of $18.00 per barrel, the beer tax would have to increase by one‐third, to 43 cents per six‐pack, from its current level of approximately 33 cents, just to offset the effects of inflation since 1991. The tax would still be considerably less than 10% of the cost of a six‐pack. Beer Industry Myth: Beer taxes are regressive and hurt working‐class people (a.k.a. " Joe‐Sixpack "). Consumer and Public Health Reality: If beer marketers are so concerned about lower income consumers, why do they continually raise prices on their own to increase profit margins? Brewers routinely increase beer prices ‐‐ without hurting sales – in order to boost profits. Producers are not concerned about ʺaverageʺ drinkers, because they know that most of their revenue comes from heavy drinkers. Alcohol taxes are not a working‐class tax, but a drinking‐ class tax. The heaviest‐drinking ten percent of beer drinkers consume 43 percent of reported beer consumption. 1 The moderate‐drinking majority of drinkers consume, on average, relatively little alcohol and pay a negligible amount of alcohol taxes. Heavy and addicted drinkers ‐‐ who account for most of the beer consumption in the U.S. ‐‐ rightly pay most in beer taxes since their drinking imposes the greatest costs on society. The Congressional Budget Office (CBO), in a 1990 report on tobacco, alcohol and gasoline taxes, found that expenditures on alcohol represented similar percentages of total family expenditures across income classes (among families that purchase alcohol). According to the CBO report, ʺThe budget share for alcoholic beverages actually rises with adjusted family income: families in the lowest income quintile spend 1.5% of their budget on alcoholic beverages, while families in the middle income quintile spend 2.0% and families in the highest quintile spend 2.3%.ʺ The report further stated that, ʺThese results suggest that, to the extent that annual …