Use caution on beer tax

One of the few bright spots in New Mexico’s economy is its booming craft beer industry, pegged with an economic impact of $340 million in 2014. There are about 60 craft breweries in the state. Craft brewing appears to be here to stay — unless a proposal to raise the state’s beer excise tax to the highest level in the United States drives the industry out of the state or out of business.

The group Alcohol Taxes Save Lives and Money is calling for an across-the-board increase on wholesale alcohol excise tax for beer, wine and spirits to boost state revenues by $154 million annually. The proposal is being shopped to legislators faced with a $589 million budget shortfall. The governor has said she opposes any tax increases.

But John Gozigian, executive director of the New Mexico Brewers Guild, says raising the excise tax “would really just stop (craft brewing) dead in its tracks ... . ”

Under the proposal, the wholesale excise tax would increase dramatically depending upon production. Microbreweries here currently pay 8 cents a gallon for the first 10,000 barrels sold. A proposed hike would raise that to $2.75 a gallon. That’s not chump change for a small business.

For large producers, the rate would rise from 41 cents a gallon to $3.08 a gallon. In neighboring Colorado, the rate is 8 cents a gallon and in Arizona it’s 16 cents.

The proposed increases also would affect the state’s wine producers. A winery would pay $1.79 a liter instead of the current 10 cents a liter on its first 80,000 liters. The tax on spirits would increase from $1.60 to $7.24 a liter.

While everything should be on the table to address the state budget crisis, a proposal so extreme it could kill off a growing industry should get short shrift.