If Governor Jim Justice manages to get rid of the state’s personal income taxes, craft brewery owners may weep in their beers – if they don’t shut down and move out of the state.
West Virginia lawmakers and Governor Jim Justice have offered three separate and distinctly different bills to phase out West Virginia income taxes, but only one of them – the governor – is proposing additional “sin taxes” for the alcoholic beverage industry to help help pay the bill.
The current proposal from the judiciary would lead to a 431 percent increase in excise tax, which the craft beverages industry can absorb or pass on to its customers. Such a tax would increase the beer keg tax from $ 5.50 to $ 29.25 for every 31 gallon keg.
Local breweries say the surge would have a major negative impact on the state craft beer industry.
“Financially, if it didn’t put us out of business, it would certainly destroy jobs,” said Jeff Edwards, co-owner of Free Folk Brewery in Fayetteville.
According to Edwards, the governor’s proposal is disappointing as it is essentially aimed at the brewing industry.
“It’s a sin tax,” said Edwards. “It would fundamentally prevent us from growing as a brewery.
“We’re in a tourist area, whether people want to believe it or not,” said Edwards. “The people who come here want to go to breweries. We are an outdoor activity state. People come here to go outside and after going outside they want a craft beer – something that is made on site. “
Aaron Rote, co-owner of Short Story Brewing in Rivesville and president of the WV Craft Brewers Guild, hopes the language will be removed from the bill as he believes the increase could make West Virginia the second highest tax rate in the country, just behind Alaska
It would probably make West Virginia a lot higher than the national average.
Regionally, the tax rate is $ 2.50 per barrel for Kentucky, $ 5.58 for Ohio, $ 2.60 for Pennsylvania, and $ 2.79 for Maryland.
Several breweries are hoping the attack on the West Virginia alcoholic beverage industry will be removed from both proposals as their profits are insufficient to accept this type of tax hike.
“This would have a direct impact on our industry. I think it could be fatal for some of our breweries, ”said Rote. “We only have about 26 breweries in the state. Some of the breweries I spoke to said they should close or move to another state that has a friendlier tax. “
Craft beer breweries pay the tax the moment beer is produced, which Rote says will be difficult for some smaller breweries.
“We need to significantly increase the cost of beer that is put into the hands of the consumer. If you have a state where the median income is low, we’re already charging $ 5 to $ 6 for a craft beer. It is already a lot to ask of a consumer. “
Rote says he is concerned that the breweries will be blamed for this and that he wants the public to know if it is actually the breweries that initiated the cost hike.
Ken Linch, co-owner of Bridge Brew Works, agrees with Rote.
He says the tax “is really a tax on beer drinkers because the cost has to be passed on.”
We have to pass the cost on because that amount they are talking about is essentially all of our profit on a keg of beer that goes on sale, ”Linch said. “It’s really annoying that no one from the state or politicians or any of them has consulted with any of us about the implications beforehand. That is the first real insult to our business. “
Linch says that the part that is not considered when discussing tax industries like the craft beer industry is that these small businesses have very low profit margins to begin with, making it nearly impossible to eat the cost.
According to the latest data from the Brewers Association, craft breweries across West Virginia had an impact of $ 289 million on the economy in 2019. Currently, 28 craft breweries produce a total of 22,964 barrels of beer per year in West Virginia.
A request for comment was not returned to the Justice Governor’s Office.