USA: Anheuser-Busch warned job cuts and decreased state revenue if a beer excise tax increase

Anheuser-Busch warned of job cuts and decreased state revenue if a beer excise tax increase included in New Jersey Governor Jon Corzine's budget proposal released earlier on March 21 is passed. The nation's largest brewer, which operates a brewery in Newark, encouraged state lawmakers to reject this shortsighted proposal and seriously consider the cumulative effect such a tax would have on the state's beer industry and the overall state economy, Anheuser-Busch announced on March 21.

"Most beer drinkers are hardworking men and women who want to enjoy a beer after a hard day's work or with friends at the local bar on weekends," stated Jerry Mullane, region vice president for Industry and Government Affairs at Anheuser-Busch Companies. "We believe it is unfair to single out one segment of society and expect them to pay for government services that benefit everyone. We are proud to be a major employer in New Jersey for more than 50 years. Raising taxes even further will threaten the jobs and livelihood of the tens of thousands of New Jerseyans employed in our industry, as well as place a burden on our customers."

In addition, the governor's proposal also includes a 1 percent sales tax increase. This sales tax increase would be added onto the beer tax increase, resulting in a double tax for consumers purchasing beer. And with both New York and Pennsylvania having lower beer excise tax rates, this proposal may cause some consumers to buy their beer in a neighboring state, shifting the tax collections and business activity across state borders.

New Jersey's beer-related businesses make a significant contribution each year to the state's economy. Through direct and indirect contributions, the New Jersey beer industry supports more than 48,000 jobs, pays more than $1.7 billion in wages, and contributes close to $5 billion to the state's economy. Anheuser-Busch's Newark brewery, which is the company's 5th largest, employs approximately 800 people with an annual payroll of $68 million.

Total consumption tax on beer in New Jersey already stands at almost $200 million annually, significantly affecting New Jersey's position in the national economy and making beer among the highest taxed of all consumer products. According to a study conducted by Global Insight, more than 40 percent of the price consumers typically pay for a six pack comes from taxes, making taxes the most expensive ingredient in beer. The total tax burden on beer is 68 percent greater than on all other purchases made in the United States. Additionally, beer excise taxes are highly regressive and unfair, because they fall disproportionately on low- and middle-income wage earners. Roughly half of beer is purchased by households with incomes of $40,000 or less.

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