Friday, November 21, 2014 · 8:36 p.m.

Beer reform supporters plan downtown rally

Local leaders don't want tax change to bring in less revenue

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Friday's event is part of a statewide campaign to reform 1950s-era beer tax policy and change the way Tennessee's wholesale beer tax is structured. (Photo: MGNOnline)

Supporters of beer tax reform are planning a rally this week in Chattanooga. The event is one of many scheduled across the state.

The event is part of a statewide campaign to reform 1950s-era beer tax policy and change the way Tennessee's wholesale beer tax is structured. 

If you go 

What: A rally in support of the Beer Tax Reform Act of 2013

Where: Mellow Mushroom, 205 Broad St. 

When: March 1, 5-7 p.m.

Who: Rep. Cameron Sexton (R-Crossville), Tennessee Malt Beverage Association, Tennessee Craft Brewers Guild, national brewers and importers, and hundreds of beer enthusiasts

More: Rich Foge, president of Tennessee Malt Beverage Association, said similar events across the state have drawn hundreds of people, and they expect a similar turnout in Chattanooga.

"It’s an important issue, but the rallies are also fun," he said. 

Rich Foge, president of Tennessee Malt Beverage Association, said via phone Tuesday that the brewing industry is united behind this movement.

But there are some city and county officials around the state who have concerns. 

The legislation proposed, called the Beer Tax Reform Act of 2013, would change the way that tax is determined for wholesale deliveries, changing it from a price-based formula to a charge for the volume of beer sold.

Rep. Cameron Sexton, R-Crossville, and Sen. Brian Kelsey, R-Germantown, are sponsoring the legislation, which would maintain the current levels of funding that local governments get from the tax—at least initially. 

But Foge said city and county leaders around the state are worried about revenues in the future, which have the potential to be less, because the revenue would be tied to sales and not price increases. 

Foge said beer reform proponents are working to come to an agreement with city and county officials on the issue. 

And Hamilton County Mayor Jim Coppinger said that local leaders aren't actively working against the bill, but he doesn't want to see less revenue for the county. 

"The way we view this—we don't want to see any change that would reduce the amount of revenue we receive," he said. 

Sexton said that the goal of the reform is for revenues to reflect beer sales but at the same time ensure that local governments keep the current revenue levels they get from the tax.

Kelsey said that the state's beer sales have gone down 5 percent in the past decade, while revenues from the wholesale tax are up by 30 percent. 

"It doesn’t make sense to tax any product like that," he said in a prepared statement. "Punitive taxes are always unacceptable.”

Under current law, Tennessee gets a 17 percent tax on the price of beer sold to wholesalers. 

The new law would make it so that there is a flat tax charge per barrel of beer, The Tennessean reported. A barrel is 31 gallons. 

The new method would get Tennessee in line with the 49 other states and how they tax beer, according to the news release from BeerPulse.com

In 2005, Tennessee had the fourth-highest beer tax in the country, also according to BeerPulse.

Since then, it has surpassed Georgia, Alabama and Alaska to become No. 1. And it's 12 percent higher than Alaska, which is at No. 2, according to the news release. 

If the state keeps rising at the current average annual price increase of $1.15, the average tax rate will be $42.75 per barrel in five years—29 percent higher than Alaska. In 10 years, it will be $48.50—46 percent higher—and in 15 years, it will be $54.25 per barrel—64 percent higher—according to beer reform proponents. 

“Tennessee is beyond the tipping point,” Foge said in a prepared statement. “The current tax policy allows the tax rate to rise unchecked at such a dramatic rise that it is now impacting competitiveness, economic opportunity, and costs and choice for consumers.  The tax rate is out of control—it’s time to modernize this old tax and make it right.”

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