New Mexico: ‘Regressive’ alcohol tax brews in Senate

 

Source: Las Cruces Bulletin

By BILLY HUNTSMAN

Feb 13, 2017

 

New Mexicans can expect to pay substantially more for their craft beers, wines, ciders and liquor if state Sen. Cisco McSorley (D, Albuquerque) gets his way.

 

His bill, SB314, seeks to raise New Mexico’s tax on craft beers from 41 cents per gallon barrel to $3.08 a barrel for all breweries that produce more than 15,000 barrels a year. The measure currently awaits review in the Senate Corporations & Transportation Committee.

 

Those in the industry are putting up stiff opposition.

 

“Though many of our breweries fall well under the 15,000-barrel threshold, we are vehemently opposed to this bill,” said the New Mexico Brewers Guild in its February newsletter.

 

The guild is comprised of craft breweries of varying sizes throughout the state, such as the Santa Fe Brewing Co., Bosque Brewing Co., and Las Cruces’ High Desert Brewing Co.

 

“We already have a handful of breweries that are approaching, are at, or are slightly over the 15,000-barrel threshold, (and) many of our member breweries aspire to grow, add locations, and begin packaging and wholesaling,” the newsletter says.

 

Overall, SB314 “sends a chilling message not just to brewers but to all manufacturers: ‘Do not grow, do not invest in New Mexico, and do not create jobs.'” Currently, large-scale breweries such as Santa Fe pay about $50,000 a year just in state excise taxes, not to mention federal excise, corporate income, gross receipts and payroll taxes. Were SB314 to pass the legislature, Santa Fe estimates it will pay more than $1 million a year in state excise tax.

 

The bill also outlines taxes that would be imposed on other alcohol produced in the state.

 

State-manufactured liquors would have a state excise tax of $7.24 per liter.

 

Wine would be taxed at $2.14 per liter, unless produced by an undefined “small winegrower.” These small wineries would be taxed at 10 cents per liter up to 80,000, 20 cents per liter up to 950,000, and 30 cents per liter up to 1.5 million liters.

 

Fortified wine would be taxed at $3.61 per liter.

 

Microbreweries, undefined in the legislation but possibly meaning breweries that only sell locally, would be taxed eight cents per gallon up to 10,000 barrels, and 28 cents per gallon between 10,000 and 15,000.

 

Cideries, namely New Mexico Hard Cider, Santa Fe Ciders Works and Santa Sidra in Santa Fe, would be the hardest hit, as each gallon of cider would be taxed at $3.08, regardless of how much (or little) is produced.

 

Further, the bill proposes that on July 1, 2021 and every four years thereafter, the state’s alcohol excise tax would be reevaluated to reflect changes, if any, in the cost of consumer goods in the Western United States.

 

To Jerry Grandle, proprietor of Mesilla’s Spotted Dog Brewery, this is just a complicated way of saying the state’s excise tax on alcohol is going to increase every four years.

 

“Taxes never go down,” he said.

 

Grandle said Spotted Dog, a micro-brewery, isn’t yet producing 15,000 gallon barrels a year, and so would not be as harshly impacted as larger breweries should SB314 pass the legislature.

 

“But as part of the brewing community, I want to support those who have been successful,” he said.

 

Grandle said he’d like Spotted Dog to expand, to become similar in size to Santa Fe or Albuquerque’s Marble Brewery, but said that would be difficult, if not impossible, were SB314 to pass.

 

Further, he said, the increased excise tax rate imposed at 15,000 or more barrels a year discourages microbreweries and other producers from expanding.

 

“This is a regressive tax that disproportionately impacts New Mexico’s poor and will effectively crush one of our state’s few expanding and successful manufacturing industries,” the guild’s newsletter says.