NH Brewers Come Out in Force Against Beer Tax Hike

John Thompson, the minister of propaganda for Smuttynose Brewing Co. in Portsmouth, was one of several NH brewer industry representatives who came out against a proposed beer tax hike on Wednesday morning at the Legislative Office Building.

Thompson told members of the NH House Ways and Means Committee that if the state Legislature were to pass House Bill 168 and impose an additional 10-cent per gallon beer tax increase, it would hurt the state's smaller micro and nano breweries that sell their craft beer wholesale.

Thompson said Smuttynose Brewing Co. has experienced strong growth since it opened in 1994. He said they have gone from producing 3,000 gallons of beer each year to 41,000 gallons of beer in 2012. They are also building a new brewery in Hampton.

In his written testimony, Thompson wrote, "Increasing the beer tax would increase pricing and hamper our competitiveness, ultimately compromising our ability to grow and to hire more workers, to purchase more equipment, fulfill growing orders and pay back the large amount of loans that we have taken on for the new Smuttynose facility."

Thompson also said the state craft breweries are strong tourism attractions and Smuttynose Brewing Co.'s weekly tours often see people from several states who want to see their facility.

NH Rep. Adam Schrader, R-Newmarket, testified against the bill, saying it would hurt Seacoast area breweries like Smuttynose Brewing Co. which have become community fixtures that do much more than just make and sell beer. He said the Portsmouth Brewery often runs fundraisers for charities and serves as a meeting place for many groups.

He said the Smuttynose Brewing Co. restaurant also contributes a great deal to the economy whether it by supporting local musicians, artists, and farmers markets.

NH Rep. Gene Chandler, R-Bartlett, the House Minority leader said “I think this is the wrong time to be doing this.”

Chandler said that if the Legislature and the Governor want to provide more money for the Alcohol Fund, they can do that within the regular budget. He asked the committee to deem the bill inexpedient to legislate. Gov. Maggie Hassan has also previously vowed to veto the bill if it ever reaches her desk.

House Bill 168 was co-sponsored by Rep. Charles Weed, D-Keene, and Rep. Richard Eaton, D-Greenville. If passed, Weed told the committee on Wednesday it would generate more than $4 million for additional alcohol and substance abuse prevention programs that are funded through the Alcohol Fund.

He said there are “huge holes in our budget” caused by a lack of revenue.

“This is a means by which we can continue to fund in a more appropriate manner what I consider necessary functions of government,” Weed said. He added a New Futures report cited that the beer tax has not been raised since 1983.

“We need to educate the people, even if the bill doesn’t get anywhere, we need to talk about tax structure,” Weed said.

Tricia Lucas, advocacy director for New Futures in Concord, told the committee “I’m not convinced that a 10 cent tax, which amounts to a penny per can, would have that much of an adverse impact.”

Lucas said the $4 million the beer tax increase would raise would go to the Alcohol Fund, which has never been fully funded by the state. “Right now, nothing from the sale of beer is part of the Alcohol Fund,” she said.

In the last biennium, she said the Legislature cut alcohol and substance abuse prevention programs by 55 percent from $7.2 million to $3.2 million and many programs that operated in the state subsequently closed.

But NH brewery and retail representatives continued to make their case that any increase in the state's beer tax, which is 30 cents per gallon, would not be a good thing given the economy.

Scott Schaier, the executive director of the Beer Distributors of New Hampshire, argued that if the 10-cent per gallon beer tax increase were approved, it would make the Granite State the highest beer tax state in New England. Currently, Maine is the highest with a 35-cent per gallon beer tax.

He also said that a higher beer tax would send 50- to 60 percent of retail beer sales to other New England states, especially Massachusetts.

Jackie Hamel, general manager of the Merrimack Anheuser-Busch brewery, said they currently employ 300 New Hampshire residents and added 20 of those jobs in 2012. She said that if the beer tax increase was approved, "this could be critical to our existence in the state."

The NH House Ways and Means Committee is scheduled to vote on House Bill 168 at a future executive session, which could be held within the next two weeks.