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Craft Brewers Fighting Construction Tax

Dana Vollmer
NPR Illinois
DESTIHL Brewery Founder Matt Potts (center) said an increase in Illinois' beer tax could stop his business from hiring more employees.

Gov. J.B. Pritzker wants to raise taxes on beer and other types of alcohol to help pay for construction projects.

The proposal would increase the state beer tax by 4.6 cents per gallon. Brewers claim that could cost them $70 million a year.

Danielle D’Alessandro, executive director of the Illinois Craft Brewers Guild, said more than half of what customers pay for their six-pack or pint already goes to the government. That includes federal, state and local taxes.

“Many may not realize it, but taxes are the most expensive ingredient in beer,” she said. “Not hops or barley or water. Taxes.”

The state beer tax hasn’t changed since the last infrastructure bill in 2009. D’Alessandro said that has offered stability for people interested in brewing craft beer — allowing the industry to grow from roughly 50 breweries in 2012 to more than 230 breweries this year.

The current tax rate on beer and cider is 23.1 cents per gallon — more than double that of neighboring states. Under the proposal, it would go up to 27.7 cents per gallon. That works out to an increase of less than half a cent per 12-ounce bottle.

Taxes would also increase on wine, from $1.39 per gallon to $2.05; and on distilled liquor, from $8.55 per gallon to $12.60. The Pritzker adminstration says all told, that would raise an additional $120 million per year.

Matt Potts, founder of DESTIHL Brewery in Normal, said beer is not a sin — and shouldn’t be taxed like one.

“Illinois craft beer has given our citizens and communities something to really be proud of and to call their own — something actually made here, sold here, loved here and supported here,” he said.

DESTIHL employs more than 250 people. Potts said the tax increase could stop them from hiring more.

To help small businesses thrive, Potts said, Illinois should follow the course of the federal government, which cut their beer tax by half in 2017.

“That reduction in the tax rate allowed us to grow — double our production, hire more people and buy more equipment,” he said. “Within a year, the federal government was actually getting just as much money from us as it was when the rates were higher.”

D’Alessandro said craft breweries are likely to swallow the cost of the tax increase rather than pass it on to consumers.

“Most of our small businesses are really committed to their communities," she said. "But at what point do they consider other options?”

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