Changes Brewing 

Campaign to change Tennessee beer tax is in the works.

Tennessee's beer tax is the highest in the country, and distributors and brewers are rallying to change it.

Rich Foge, president of the Tennessee Malt Beverage Association and one of the organizers behind, says the dubious honor stems from the state's unique wholesale tax, a 17 percent tax based on the price, not the volume, of beer sold to distributors.

"Every time the cost of doing business goes up and the price of beer goes up, the tax automatically goes up with it," Foge said. "We used to have the fourth-highest beer tax in the country, but in the past 10 years, we've passed Georgia, Alabama, and Alaska to be number one. And that's without the tax rate changing. That's because it grows with price increases, and there's really no end in sight."

But there could be an end if legislation proposed by Tennessee senator Brian Kelsey of Germantown passes this year. Kelsey's bill, which he says is revenue neutral, would convert the wholesale beer tax from a percentage of the wholesale price of a barrel of beer to a tax based purely on volume.

"I think this is the right thing to do, but any time you have a bill dealing with taxes, it's always somewhat of an uphill climb," Kelsey said. "But I feel very good about our chances of passing the bill this year."

Under the current tax system, a beer in Memphis is taxed four times: a federal beer excise tax of $18 a barrel, followed by a state beer excise tax of $4.29 a barrel, followed by the state wholesale tax of 17 percent on the price of that particular beer, and then the local sales tax of 9.25 percent.

Revenue from the wholesale tax goes to cities and counties across Tennessee. In 2011, Memphis received nearly $15 million dollars in revenue from the wholesale tax.

Because the tax is based on the price of the beer, it affects craft brewers and imported beers most acutely.

"Those craft beers are small batch-brewed, and a lot of them are Tennessee brewers or small regional brewers, so their prices are at the higher price point of beer. That 17 percent taxes their beer higher," Foge said. "So a craft beer or an import beer like a Heineken will have a higher tax on them than a Milwaukee's Best or a Natural Light."

And as craft breweries grow and take up a larger share of the beer industry, Tennessee's wholesale beer tax is coming into sharper focus.

"It tends to be a barrier to diversity of products in the market and penalize the small producer," Chuck Skypeck of Ghost River Brewing said. "It certainly keeps the market from growing. I know some brewers from out of state who won't send their beers into Tennessee because they'll be priced so high."

Linus Hall of Yazoo Brewing Company in Nashville agrees.

"We've been in business 10 years, and as soon as you try to grow your business in Tennessee, and you really start to be affected by this wholesale tax, you realize what a burden it is," Hall said. "You realize we're way in the stratosphere relative to other states."

Last year, Hall and other small brewers formed the Tennessee Craft Brewers Guild, and this year, they joined forces with the Tennessee Malt Beverage Association. They have also gotten a little help from what Hall calls "the big guys": lobbyists from Anheuser-Busch and MillerCoors.

"The big guys are interested in having a consistent tax they can figure in like in all the other states they do business in," Hall said. "It's kind of a rare instance where you have wholesalers and small brewers and big brewers all on the same page trying to fix this. This tax has been around since 1954, and, over time, it's been brought up to have it changed, but it just seemed like the big national brewers trying to get a tax break because there weren't any local breweries to put a face to the problem."


Showing 1-1 of 1

Add a comment

Subscribe to this thread:
Showing 1-1 of 1

Add a comment

    • Creative Process

      Memphis Brooks Museum of Art leader talks about the decision to consider leaving Overton Park.
    • Fun Money

      Locals, tourists invest in good times here.


News Blog

Supreme Court Steps In on Fayette Church Matter

Intermission Impossible

Muhammad Ali Meets Stepin Fetchit at The Hattiloo Theatre

News Blog

Task Force Considers Medical Cannabis

News Blog

Trolleys Return to the Tracks for Testing

Music Blog

Jessi Zazu: In Memoriam

Beyond the Arc

Deflections: The Roster, TV Angst, and The Buy/Sell Clause

Film/TV/Etc. Blog

The Vietnam War

We Saw You

Cooper-Young Fest, Big Bugs, Art of Caring

Music Blog

Linda Heck: Bound to ExCITM tonight

Intermission Impossible

A Memory of Charles Billings


More by Hannah Sayle

  • Recipe for Success

    Andrew Ticer and Michael Hudman on their new cookbook, Collards & Carbonara.
    • Aug 29, 2013
  • Midtown Magnetism

    Babalu fills in another Overton Square spot; Muddy’s to open on Cooper.
    • Aug 22, 2013
  • Open House

    The historic Magevney House will soon reopen to the public.
    • Aug 22, 2013
  • More »

Readers also liked…

© 1996-2017

Contemporary Media
460 Tennessee Street, 2nd Floor | Memphis, TN 38103
Visit our other sites: Memphis Magazine | Memphis Parent | Inside Memphis Business
Powered by Foundation