I try to keep my political opinions detached from business, but sometimes things have to be dealt with when they threaten the existence of said business. If you haven’t heard, the big beer news over the last few weeks is that Gov. Inslee is proposing the extension of a temporary tax on brewers, and the removal of a small brewer exemption, which helps enable small craft brewing in Washington state. I won’t go too deep into the details because they’ve been written about eloquently over here, here, and here. If you’re interested in getting some perspective on the original tax proposal, rewind to 2010. You will note that the original tax was almost a tripling of the tax rate at that time, that the 2010 tax brought us into the top handful of states with the highest beer tax. The author of the article was correct to comment “yeah, right” in response to the notion that it would be temporary.
Small brewers operate on a very different scale than big brewers do. There is a reason why you pay a little more for beer produced on a small scale. When you spread out your fixed expenses (rent, utilities, etc…) over every pint you produce, they skyrocket as you scale down to the tiny brewery. Ingredients cost a lot more when you buy by the lb, rather than the ton. In addition, the amount of labor a tiny brewery has to put out goes through the roof. These things cannot be avoided, but they can be mitigated by a government that cares about growing industries and supporting homegrown entrepreneurs. I can’t speak for other brewery owners, but my goals aren’t to be working 70-80 hrs a week forever. If I can’t afford to hire help, if I have to raise prices and lose customers, I won’t be capable to investing in equipment and production that then allows more jobs, more sales, more taxes paid.
Seattle’s tiny brewery list isn’t all that small: Peddler’s, Populuxe, Epic Ales, Machine House, NW Peaks, Reuben’s Brews, Foggy Noggin, Spinnaker Bay (soon), and a few others that are slipping my mind. Nevertheless, how much revenue does the state stand to raise with this blunt tool? I can’t imagine it would be enough to justify destroying a fledgling corner of an industry that Washington state excels at. Where Inslee’s beer tax doesn’t destroy, it will injure tiny breweries enough to kill our dreams of growing. I certainly don’t want to be fighting against funding education, which is where the money is slated to go. I am not particularly anti-tax in general. I want to put in a share to support things that we all want for our society, but I think we should be able to demand a little more precision in how we apply these taxes.
Right now, there is a rally in Olympia. I really wish I could be there, but I have to go open the tap room, breed yeast, keg a batch, clean, do paperwork. Please get involved if you can. If you can’t, please come down tonight and drink some hand made beer made down the street. I’m there from 4-8pm Wednesday through Saturday.