La Cumbre’s Erway speaks out against new alcohol tax proposal

Posted: September 15, 2016 by cjax33 in Beer and Government, News
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The bills have passed! Thank you, Governor Martinez and everyone who works in this building!

The State of New Mexico may be on the verge of severely damaging our craft brewing industry.

The State of New Mexico is at it again. Certain legislators want to raise the taxes on alcohol to help balance the budget. While we would all like to see them actually pull off a balanced budget, this sort of move would be disastrous to our breweries, wineries, and distilleries.

La Cumbre owner Jeff Erway shared his letter to the editor, which he sent to the Albuquerque Journal after the editorial staff there (which is way more conservative than you might otherwise know for a newspaper) said it was in favor of the tax. Jeff did not know if the Journal would actually publish his letter, so he shared it with us as well. We have reprinted it here in full, because Jeff can describe just what a terrible idea this tax increase is far better than we ever could.

Read this carefully, let us know what you think, and if you agree with Jeff, it might be time to start contacting your state representative and telling him/her to vote no should this bill come up in the legislative session in early 2017.

Dear Editor,

I was alarmed today to read of your support on raising taxes on all alcohol in our state. Currently, the excise tax on wine is $1.70/bottle, $6.06/bottle on spirits, and $.41/gallon on beer. That makes us #5, #21, and #12 respectively on those taxes in the country in a state whose GDP per capita ranks #39, and whose economy ranks #48 overall. *

Enacting the proposed $.25/drink tax would bring the tax on a bottle of wine to $2.95, the tax on a bottle of spirits to $12.06 (that’s double what it currently is) and the tax on a gallon of beer to $3.08/gallon. To put that into perspective, you are supporting raising the state tax on wine to the 2nd highest in the country, liquor taxes to the 4th highest rate in the land, and beer to the very highest rate in the country, 2.5x the current holder of that title, Tennessee.**

Let’s keep in perspective that breweries, wineries, distilleries and their respective wholesalers and retailers already pay corporate income tax at both the State and National level. The owners and employees of these businesses pay payroll taxes and capital gains taxes at both the State and National level. The retailers already pay a state and local sales tax on all sales. And the producers and wholesalers already pay Excise taxes at both the State and National level.

Might I also add that the craft breweries, craft wineries and craft distilleries are some of the only sectors for job growth in this State? In the past 6 years, since my brewery opened, breweries have added over 3,400 jobs and over $127,000,000 in wages/year to the State’s economy. Economic impact to the state will clear $450,000,000 in 2016. ***

You cannot tax state businesses into prosperity.

Despite what MADD would have you believe, this is simply a neo-prohibitionist proposal that is aimed at limiting peoples access to alcohol, and it will hurt the State’s breweries, wineries and distilleries most by making their products more expensive to the end consumer. You will take a local product that is viewed as an affordable luxury and make it unaffordable to our already cash strapped residents. Instead of supporting local businesses, the consumer will be economically forced to support the very largest of producers who can afford to keep their prices and margins at rock bottom. As has been shown time and time again, this will not change the consumption of the heaviest drinkers, just which alcohol is purchased and therefore where that alcohol was produced. According to a study by Willard Manning et. Al in 1995, moderate drinkers are far and away the most guided by the price of alcohol and will simply choose to not drink when prices become absorbent.

This proposal is a job killer to the 3 very industries that are actually currently growing in NM. It is a shot in the foot of the State’s economy and employment.

I would in no way ask our state to cut funding to schools, health nor public safety, and I personally would not be completely opposed to a consumption tax proposal. That being said, the number of pet projects that are going on around the state that have not been ear-marked for cuts is somewhat appalling and yet your editorial board sees it fit to raise that taxes on the few industries that are working.

I wonder how the Journal and its employees would feel if the state proposed a rise on taxes for print advertising. The journal is taxed at a far lower level than the liquor industry is. No, definitely a better idea to raise taxes on the only industries that are adding jobs. We definitely don’t want anyone getting the idea that NM’s economy has any ray of hope left in it.

Yours truly,

Jeffrey S. Erway, Founder and President

La Cumbre Brewing Co.

*businessinsider.com
http://www.businessinsider.com/state-economy-ranking-july-2015-2015-7/#1-north-dakota-555555555555555551

**taxfoundation.org
http://taxfoundation.org/blog/how-high-are-wine-taxes-your-state
http://taxfoundation.org/blog/map-spirits-excise-tax-rates-state-2014

***Estimates based on 2014 Economic Impact Study. https://www.brewersassociation.org/statistics/economic-impact-data/

* * * * *

Thank you to Jeff for sharing this. Clearly, craft beer is threatened in New Mexico. Now is the time to stand up and say no to this tax increase.

The Crew will keep you all updated as this story continues to develop.

— Stoutmeister

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Comments
  1. Leah Black says:

    So we’ll put, Jeff. As a previous employee of yours, and friend, I support your stance.

  2. “It’s not the fact that we shoot ourselves in the foot that’s astounding….it’s how fast we reload”

  3. Michael says:

    First I’d like to say I’m not in dis-agreement with what Jeff has to say but his tax numbers are the upper end of the tax scale. He isn’t mentioning the economies of scale the larger breweries benefit from because of lower input costs. Sin taxes are often used to cover shortfalls in government because the other side just says we’re doing it to stop DWIs. Everyone applauds and the taxes pass. The real issue is the privatization on the liquor laws. With a finite number of licenses, the bars will congregate and there will be the need to travel in order to have a drink. The state could generate more income if they charged an annual fee for liquor licenses and their applications. The increase in the number of establishments would make the current taxes in place plus the fees associated with the upkeep help subsidise the empty coffers. Jeff is right. Let’s coddle some industries in this state that are bringing growth and reasons to travel to New Mexico besides Breaking Bad tours.

  4. Michael says:

    It’s easy for the proponents of this new tax to say “it’s only $0.25 a drink” as people immediately think of a cocktail or a beer at a bar that might already be $4 – 7. That’s an increase of about 3.5% to 6%. However, when you think of buying a 6-pack or a case of beer where that single beer might only might cost $1.00 to $1.50, now it goes up to $1.25 – $1.75% which is a 17% to 25% increase. When you look at it on a per gallon basis it’s a 651% increase! This is a naked grab for cash. Lowering consumption and decreasing DWIs is just a smoke screen. I am strongly opposed to this proposed tax hike and will be contacting my state senator and representative to let them know that I am not in favor a increasing taxes 651% on one of the few growing industrial in a state that can always use more jobs.

  5. […] cheers for the brewing industry in 2016. Earlier in the year, the industry experienced a bit of a shot across the bow, from the radical neo-prohibitionist group, Alcohol Taxes Save Lives and Money. The group proposed […]

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