How you celebrate St. Patrick’s Day will vary depending on the country you reside in and the local culture. But no matter where you live, you’re sure to see a lot of green and people enjoying a beer or two. If you happen to be enjoying a beer on St. Patrick’s Day (designate a driver!), taxes are likely the farthest thing from your mind. But the numbers matter, and ultimately affect jobs, wages and growth in the industry.
California is home to the largest number of craft brewers in the nation. These breweries produce nearly 3 million barrels of beer each year, providing jobs and tax revenue throughout the state.
In particular, one study found that the craft brewing industry in San Diego County provides an economic impact that is more than 1 ½ times greater than the economic impact of Comic-Con International, San Diego’s largest annual convention. Nearly 3,000 jobs have been created or sustained by San Diego’s craft brewing industry, and brewery tourism in the area is on the upswing. Clearly, by any measure California’s craft brewers are leading the way in this industry.
Craft brewers face many challenges in producing beer that is competitively priced compared with other mass produced beer available on the shelves. Besides production costs, taxes can account for up to 40% of the final cost of a beer. Currently, California levies the 29th highest excise tax of $0.20 per wine gallon, equivalent to one gallon ($6.20 per barrel), on beer brewed and sold in the state regardless of the brewer size with out-of-state sales qualifying for a credit or rebate.
The Washington, D.C. based Beer Institute keys taxes as the biggest driver of beer prices. During an attempt to balance the budget in 1991, the federal government doubled the beer tax from $9.00 to $18.00 per barrel as part of a luxury tax package that included yachts, private planes and jewelry. Many craft breweries run smaller operations than the breweries that existed at the time the tax was instituted. Our breweries in California add to the widely diversified economy of our state, and many aspiring brewers look to California creations for inspiration and current trends.
Happy St. Patrick’s Day to everyone, especially our homegrown breweries here in California.