Tuesday, October 13, 2009

2009 Assembly Bill 287 - The Beer Tax - In-Depth Analysis

Hearing on 2009 AB 287 (pdf) is at 10am this morning. Unfortunately, I can't make it. But, Here's a blow-by-blow on this relatively short (6 page) bill.

June 2, 2009 − Introduced by Representatives BERCEAU, ROYS and HILGENBERG, cosponsored by Senator RISSER. Referred to Committee on Public Safety.

Analysis by the Legislative Reference Bureau
This bill increases the tax rate for the tax on fermented malt beverages from $2 per barrel to $10 per barrel. In addition, an amount of the taxes collected on fermented malt beverages equal to $2 per barrel will be used by the Office of Justice Assistance in the Department of Administration to provide grants to counties and municipalities to reduce crimes related to alcohol use by employing additional law enforcement officers and obtaining equipment and training, and an amount of the taxes equal to $4 per barrel will be used for community aids related to alcohol and drug abuse treatment services. Finally, an amount of the taxes equal to $2 per barrel will be used for grants for substance abuse treatment and prevention programs.

So, this is a quick summary of the bill. Basic gist: tax up from $2/bbl to $10/bbl. $2/bbl of the tax will be used to provide grants to local law enforcement "to reduce crimes related to alcohol", $4/bbl will be used for "community aids", another $2/bbl will be used for grants to substance abuse.

Section 1. [Grants will be provided out of the beer tax fund] to counties or municipalities to employ additional law enforcement officers, to obtain equipment and training, and, subject to [conditions below], for overtime work if the officers, equipment, training, and overtime assist in reducing crimes related to alcohol use. ... A county or municipality applying to the office for a grant under this subsection shall include a proposed plan of expenditure of the grant moneys. The grant moneys may be used only as described [above]. ... The use of all moneys distributed under this section shall comply with evidence−based practices established by the department. ... The office may not award an annual grant in excess of $250,000 to any county or municipality. ... The grant that a county or municipality receives under this subsection may not supplant existing local resources. ... For each year that a county or municipality receives a grant, the county or municipality shall provide matching funds of at least 10 percent of the amount of the grant."

So, counties and/or municipalities just need to front 10% of the grant and they can use the money to pay for "officers, equipment, training, and overtime" so long as those items or activities are used to "reduce crimes related to alcohol use." So, presumably up to $250K per year can be used to buy new cops to write speeding tickets, since traffic work might "reduce crimes related to alcohol use." Notice that the "officer, equipment, training, and overtime" don't actually have to reduce crime related to use - there is no responsibility or accountability for the funds - just that to get the funds the department must show that alcohol-related crime could be reduced with "evidence-based practices" (of course, it's up to the department what constitutes proper "evidence" that the practice will reduce alcohol-related crime).

So far, a beer tax is underwriting the ill-effects of not just beer, but wine, low-end vodka, bourbon, brandy, long-island iced teas, rum, gin, wine coolers, jello shots, fish bowls, and jagermeister.

The department shall distribute grants from the [beer tax] to counties, municipalities, school districts, nonprofit organizations, ... and cooperative educational service agencies to provide alcohol and drug abuse treatment and prevention programs.

And weed, coke, meth, lsd, barbituates, tranquilizers, aerosol, heroin, ....

An occupational tax is imposed upon the removal for consumption or sale or selling of fermented malt beverages at the rate of $2 $10 per barrel of 31 gallons and at a proportionate rate for any other quantity or fractional parts thereof. Not more than one occupational tax shall be required to be paid on any one container of fermented malt beverages.

This is the part that raises the non-credited part of the excise tax to $10/bbl. It's not entirely clear that the "more than one occupational tax" applies to out-of-state barrels here. In theory, barrels going out of state will pay "more than one" if they have to pay both a Wisconsin and a foreign occupational tax. This is not entirely clear and I would want to see this made explicit. The only change to the existing code is to increase from $2 to $10 though - so presumably it will still be interpreted as it was.

In this section “eligible producer” means any producer of fermented malt beverages, whether or not located in this state, producing less than 300,000 barrels of fermented malt beverages in the calendar year for which credit under par. (a) is claimed. In determining the number of barrels, all brands or labels of a producer shall be combined and all barrels exported out of this state shall be included. All facilities for the production of fermented malt beverages owned or controlled by the same person shall be deemed a single producer.

It's important to note what this section does NOT do: namely, destroy the producer credit. It does not amend or destroy 129.02(2)(a). Breweries under 300K bbls will still get a 50% credit on the first 50K bbls. So, unless you are producing more than 50K bbls your tax will go up from $1/bbl to $5/bbl. If you make between 50K and 300K barrels you will still get a 50% credit on the first 50K bbls, but you will pay $10/bbl on the remainder. If you make over 300K bbls you are not eligible for the credit on any of your barrels. This is not a substantive change except in the $2 -> $10 number.

What it DOES change is that it now includes exported barrels in the counted barrels. Interestingly, this could end up affecting everyone's favorite "small" big brewery, Minhas, the most. Prior to this change, barrels that left the state were not counted in "how big" you were vis-a-vis the tax credit. If you, say, produced 40K bbls that stayed in-state, but produced 500K bbls that went out of state, you were eligible for the tax credit, because only in-state barrels were counted. Now, both in-state and out-state barrelage are counted to determine eligibility for the credit. Thus, this hypothetical brewery would have been eligible for the credit under the prior law (only paid $1/bbl on the first 50K bbls) but will not be eligible for the tax credit under this law (all 40K bbl will be subject to the full $10/bbl).

THIS section does not apply the tax to those out-of-state barrels. It ONLY establishes that out-of-state barrels count towards your credit eligibility.

The remainder of the bill just sets out the $2/$4/$2 distribution as set forth above. That's all that 2009 AB 287 does, folks.


  1. Any update on the hearing today?

  2. Would you be willing to write a form letter so that those of us who are not as informed about the bill can have something to fire off to our politicians?

  3. I was in the meeting today and I thought at the beginning both sides were represented, however by the end of it, 6 or so hours, the representatives were slouched in their chairs, leaned on their hands which leaned on their elbows and were acting like they just wanted out of their. They surely weren't acting at that point to be representing "the people". This tax is unfair. They are wanting 65 or so company's (brewery's in Wisconsin to pay for it. That is not fair. Choices make people smokers, drinkers and drug atticks; not the company's who employ people to manufacture products.


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