November 26, 2014

Nebraska lawmakers consider increasing beer tax

LINCOLN, Neb. (AP) – A Nebraska lawmaker said alcohol problems in Whiteclay inspired him to propose a bill Monday that would increase a beer excise tax by 5 cents per gallon.

The increase would generate about $2.3 million over each of the next two years, Sen. Al Davis of Hyannis told the Legislature's General Affairs Committee. The panel took no action on the bill.

The money would be split evenly between the State Patrol Cash Fund and county law enforcement agencies. Davis said the money would allow law enforcement agencies to hire workers to combat alcohol-related crimes. Counties would be given the extra tax only from alcohol purchases in their area.

Whiteclay, a northwestern Nebraska town that borders the Pine Ridge Indian Reservation, has only about a dozen residents but four beer stores. Last year, the Whiteclay stores sold about 4.3 million cans of beer. Tribal leaders have blamed Whiteclay beer stores for alcohol abuse on the reservation.

“Dealing with alcohol-related crimes can be overwhelming for local police force out there,” Davis said. “I don't think it will deter consumption much, but it will provide revenue to law enforcement.”

Nebraska's current beer tax is 31 cents per gallon, which is higher than in all bordering states. South Dakota taxes 27 cents per gallon of beer, while Wyoming taxes just 2 cents per gallon of beer. Davis said the proposed increase in Nebraska would amount to about a nickel per 12 pack of beer.

Nebraska breweries, the Nebraska Grocery Association and the Nebraska Licensed Beverage Association oppose the bill. Davis said he expected the opposition and that he would be willing to consider exempting Nebraska brew pubs from the excise tax.

Jason Payne, president of the Nebraska Craft Brewers Guild, said the group opposes the increase. He said it would hurt local breweries, including his own Lucky Bucket Brewing Co. in La Vista. Nebraska has 18 craft breweries, eight of which have been established in the past two years, Payne said.

“Speaking as a small-business owner in Nebraska, a suggested tax increase from 31 cents a gallon to 36 cents a gallon would be a determinate to an exciting and growing segment in Nebraska's economy,” he said.

Thomas Wilmoth, co-owner of Zipline Brewing Co., said the bill would not only slow the growth of his year-old brewery in Lincoln, but also increase the cost of beer for consumers.

He noted that Nebraska's craft brewing industry actually grew during the recession, unlike many sectors of the state's economy. He said states with lower excise taxes, such as Colorado, have more breweries.

No one testified in support of the bill, but the Nebraska Association of County Officials and Project Extra Mile, a group that works to stop underage drinking, submitted supporting letters.

Project Extra Mile said a review of 72 studies printed in the Journal of Preventive Medicine shows a link between increased alcohol taxes and a decrease in alcohol consumption.

“Young people are particularly sensitive to price changes, and the literature is clear that as price increases, youth access to alcohol decreases,” said Nicole Carritt, Project Extra Mile executive director.

Davis asked the committee to keep in mind he crafted the legislation to combat alcohol problems in Whiteclay.

“I don't think we are going to be losing customers to other states,” Davis said. “I don't think we are going to be impacting significantly anything except funneling revenue back to our law enforcement where it needs to be.”

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The bill is LB653

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