St. Patrick’s Day festivities vary person-to-person depending on local culture and traditions. Most festivities include a lot of green and plenty of great beer. If you happen to be enjoying a beer on St. Patrick’s Day (designate a driver!) then taxes are likely the farthest thing from your mind. But the numbers do matter here in California and ultimately affect jobs, wages, and industry growth in California.
California is home to the largest number of craft breweries in the nation. These 550 breweries contribute an amazing $6.5 billion to the state’s economy and employ more than 48,000 Californians.
The impact from the craft brewing industry in San Diego alone contributed $600 million with the number of brewpubs more than doubling in the year 2014. This economic growth has since brought along many new employment opportunities for the County. Within the San Diego region, breweries and brewpubs have created and sustained over 6,000 jobs.
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 cite 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. Despite this, our breweries in California continue to thrive and 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 you, and to our homegrown breweries here in the Golden State.