Pennsylvania beer drinkers, listen up: Your home state is about to enact a new tax on your favorite beverage and it is almost certain to lead to higher prices for consumers depending on where they purchase their beer.
The Pennsylvania Department of Revenue is ready to begin a new tax on beer, effective July 1, 2019. The new tax applies to brewed beverage manufacturers that sell beer products onsite, directly to consumers. The tax was supposed to take effect on January 1, 2019, but a revision to the new law, issued in October, 2018, moved the effective date forward six months.
This new tax will primarily impact manufacturers or holders of a “G” license, which is the license issued to any brewery of beer or other malt beverage. A brewery that holds a “GP” license, a designation for an establishment that holds a brewery pub license for onsite consumption, will also be impacted by the new law.
Just how large is the new tax? It amounts to a six percent levy on every retail dollar sold. Thus, a $5 beer will get taxed 30 cents; a $6 dollar beer will get taxed 36 cents; a $7 beer will get taxed 42 cents; you get the drift. Taxes like these are almost always, ultimately, borne by the consumer. Businesses have to generate enough profit to stay afloat and more likely than not, they will pass on the entire tax or almost all of the tax to the consumer in the form of higher prices.
Because this tax is assessed only on breweries that sell beer onsite, it will not affect every glass, bottle, or can of beer equally. If you purchase your beer in a restaurant, for instance, there will not be any added tax because restaurants do not brew the beer. This could mean a slight reprieve for consumers who choose to drink beer at their favorite eatery. But it has brewery and brewpub owners crying foul, due to its inherent unfairness.
Taxes are a fact of life, as we are all acutely aware. Pennsylvania residents will have to pay a slightly higher price in 2019 for the beer they love and it could have an impact on the craft beer industry as a whole. Taproom sales account for a high percentage of revenues, especially for startup breweries that do not yet can or bottle their beer. It will be interesting to see how the economics of this new tax plays out in the year ahead.
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