Proposed Beer Tax Hike Draws Smuttynose's Ire

A House bill that is calling for a 10-cent beer tax hike is threatening to put the state’s beer breweries over a barrel.

“This affects all of us,” said JT Thompson, the minister of propaganda at Smuttynose Brewing Co. in Portsmouth. He called it a “sin tax” that will adversely affect larger breweries and microbreweries.

“We should be encouraging local businesses to grow instead of raising taxes on them,” Thompson said.

If Smuttynose has to pay an additional 10 cents per gallon, Thompson said that represents a pretty big spike they would have to absorb. In 2012, he said Smuttynose brewed 43,000 barrels of beer and each barrel contains 31 gallons. The proposed tax increase would leave Smuttynose with just over $133,000 in additional costs.

“With a new brewery opening up, we feel like that money could be put to much better use to hire staff or increase production,” said Thompson. Smuttynose is currently building a new brewery in Hampton that is scheduled to be done by Thanksgiving.

House Bill 168 is co-sponsored by Reps. Charles Weed, D-Keene, and Richard Eaton, D-Greenville. If passed, the bill states that it would raise an additional $4,295,108 for the New Hampshire Department of Health and Human Services alcohol abuse treatment and prevention fund by increasing the current beer tax from 30 cents to 40 cents per gallon.

Weed said he believes the bill is good for New Hampshire because “I think that government provides a service and people ought to pay for it.”

He also said the state needs more revenue and has been underfunded for quite some time. More importantly, Weed said the 10 cent tax increase would fund additional rehabilitation for people who are suffering from drug and/or alcohol abuse.

Rep. Laurie Sanborn, R-Bedford, who serves on the House Ways and Means Committee and co-owns The Draft restaurant and bar in Concord, said she doesn’t think it is a good idea to raise taxes on anybody.

“Now is a really bad time to be taking money out of the economy,” she said.

Rep. Patrick Abrami, R-Stratham, another member of Ways and Means, said he is also hesitant to approve an additional tax, especially the beer tax. He said if the bill is approved, New Hampshire would have the highest beer tax compared to Maine (35 cents per gallon), Vermont (27 cents per gallon) and Massachusetts (11 cents per gallon).

The Ways and Means Committee is comprised of 11 Democrats and nine Republicans, and Sanborn believes most of the GOP members would oppose this bill.

Thompson questions why the state lawmakers want to make brewers pick up the tab instead of getting the money from the sale of spirits at the New Hampshire Liquor and Wine Outlet stores.

Thompson said New Hampshire breweries do a great deal for the state as far as drawing visitors and promoting the state’s image. On Thursday, he said he was reaching out to brewers across the state to get them involved in the effort to reach out to the state Legislature to come out against this bill.

Thompson said the New Hampshire Wholesalers Association and state Grocers Association also have a vested interest in this.

Thompson said the negative ripple effect of a higher beer tax would be felt by restaurants, grocery stores, bed and breakfasts – any business that sells beer – and they would have to pass the additional cost onto their customers. He said consumers might have to pay somewhere in the neighborhood of 15 additional cents per six pack.

“People aren’t willing to pay as much for beer as they are for wine,” he said.