An effort was underway by some members of the Anchorage Municipal Assembly to increase the tax on AK craft beer. The proposal called for an immediate tax increase up to 5%, which likely means 5%, followed by an additional 2% increase every 2 years to a total increase of 10% – all without another vote. Some Assembly members had to accomplish this by sidestepping the Municipal Charter that calls for a three-fifths majority vote for all new taxes, calling it a “one-time” exemption.
Brewers in Alaska are opposed to any attempt to increase the tax on their products. As small business owners, they run their businesses on very tight margins and any loss of sales can be felt. Although this tax is applied at the wholesale level to all alcohol, it hits AK craft brewers especially hard. Due to transportation costs; equipment, ingredients, cans and bottles and the final product, the cost to get their beers to you, the beer lover, is higher than craft and macro brew imported from outside Alaska. Not only does that put them at a disadvantage when trying to keep production costs down, it also affects how much they have to sell their beers for.
As a premium Alaska product, these beers are priced as craft beers, which are on the top end of the market. As the price of these beers rise, it slowly will push the customer to lower price offerings, especially in this time of economic instability. In addition, the large breweries and their “craft brands” may be able to absorb some or all of the tax increase because of their economies of scale and desire to grow market share. Breweries in Alaska are small and are not able to assume these costs so the price discrepancy would grow. With consumers less willing to pay higher prices, should this pass, and more sales of imported beers, the craft beer industry in Alaska’s growth may stagnate and even decline.
Just say no to new taxes on AK craft beer.