Beer Tax Would Have Local Impact [AUDIO]

ST. CLOUD -- With just one week left in the legislative session, lawmakers in St. Paul are hammering out the final details of a budget for the next two years. One possibility still on the table is an increase of taxes on alcohol in the state.

Talks of a possible tax increase is raising major concerns from industry officials. If included in the final package, the excise tax on a 31-gallon barrel of beer would jump from $4.60 to $27.75 - an increase of 600%.

Nick Barth is the food and beverage director at D.B. Searles in St. Cloud. He says consumers will notice a spike in their tab the next time they visit a bar.

The tax increase will also be applied to other alcoholic beverages such as wine, cider and low-alcohol dairy cocktails. Barth says this will make it more appealing to buy alcohol from neighboring states that have significantly lower costs.

According to Hospitality Minnesota, if approved, Minnesota would have the highest excise alcohol tax in the five-state region. The next closest state would be South Dakota with a tax rate of $8.50.

The impact will likely be felt at the local brewing level. Doug DeGeest is the general manager - vice president of Third Street Brewhouse in Cold Spring. He says this jump will take a heavy toll on alcoholic consumption in Minnesota.

DeGeest expects a bump in the price of a craft beer from anywhere between .55 cents to over a dollar.

Authors of the bill say the new revenue would go to counties for alcohol addiction services. However, Barth is questioning the decision to make the new revenue flow available to the general fund.

Research by the Minnesota House shows that taxes on alcoholic beverages tend to be regressive - meaning the poorest Minnesotans would be hit the hardest by an increase.

DFL leaders met with Governor Dayton over the weekend to work on compromise bills. The alcohol excise tax was last raised in 1987.