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.
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.
Jeffrey S. Erway, Founder and President
La Cumbre Brewing Co.
***Estimates based on 2014 Economic Impact Study. https://www.brewersassociation.org/statistics/economic-impact-data/
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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.