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We’ve got a bill in the Senate and will soon have one in the House!
Our thanks to Sen. Cisco McSorley for sponsoring SB 314 that raises most New Mexico alcohol excise tax rates 25¢ per drink. Having made it this far has caused the Brewer’s Guild to go on the war path. It’s led to a lot of misinformation being spread that I’d like to correct.
First and foremost, Sen. McSorely has always supported reduced tax rates for small brewers and local wineries. He voted for Micro Breweries and Small Wineries having the reduced tax rate when it was first nearly a decade ago. And nothing I’ve heard in him say suggests he’s wavering from supporting them again today.
SB 314 was intended to exempt small wineries and microbreweries from the 25¢ per drink tax increase imposed on larger distributors hawking out of state products. However, state law lists alcohol tax rates by the gallon or liter, not by the drink. Due to a math rounding error when multiplying this out, the bill raises the rate for microbreweries by .03 cents per gallon. Word I hear from Senators on the Corporations and Transportation Committee that will be hearing the bill is to expect an amendment eliminating the .03 cent increase.
By keeping the tax rates virtually the same for small wineries and microbreweries, while raising them for larger distributors, SB 314 gives and an even greater competitive advantage to local brewers than they already have. That’s why I find it surprising that the Brewer’s Guild has become all hot and bothered by the bill. My guess is that some of the “small” brewers aren’t so small anymore and they’re trying to avoid having to pay the same tax rates as the big distributors pay.
If a distributor sells more than 15,000 gallons of beer under current law, it will be taxed at 41¢ per gallon, rather than the reduced rate of 8¢ per gallon breweries producing less than 15,000 gallons get taxed at. If Micro Breweries want the exemption to be higher than 15,000 gallons in order to help them grow their businesses even larger, they should ask for that, rather than criticize a bill that creates and even more favorable price differential between large and small beer distributors.
Word I get from the Representatives and Senators I’ve talked to is that nearly all would be favorable to a request raise the exemption threshold. Which makes it even more strange that the Brewer’s Guild seems to be provoking name-calling and web-trolling rather then trying to sit down and talk with lawmakers about their needs. What I’m hearing across the board is that their tactics aren’t winning them any new friends and is starting to ware thin on long time supporters of their industry.
Another important point of clarification is that through an error, SB 314 inadvertently raised the tax rates on cider producers, which was not the intention of the bill’s sponsor, Sen. McSorely. I fully expect to see an amendment in committee that will exempt NM Cider producers from any alcohol excise tax increases.