Brewery owners: Why are state leaders picking on beer?

Brewery owners: Why are state leaders picking on beer?

But local liquor stores likely to benefit from change

PAWTUCKET - Owners of two local breweries that are leading the way for Rhode Island's blossoming craft beer industry say they're confused by state leaders' decision to target their beverage for extra income.

The big question, they say, is why leaders seem to be pulling the wind out of the sails for one of the state's few business success stories?

State legislators last week voted to raise the excise tax on all alcohol by 10 percent, with the change going into effect on Monday. But while the plan calls for sales taxes on wine and spirits to disappear in December, the sales tax on beer would remain.

The bill, proposed by state Rep. Jan Malik, a Democrat serving House District 67 in Barrington and Warren and an owner of a liquor store, could bring a substantial financial benefit to city liquor stores, say state lawmakers, as Pawtucket is bordered by the Massachusetts communities of Attleboro and Seekonk.

The approved change won't likely make a huge difference on the beer business in Rhode Island, say the owners of the two Pawtucket breweries, but it does dampen the enthusiasm around the craft beer industry, which was highlighted during the first Rhode Island Brew Fest in Pawtucket's Armory in February.

"From what I've read, the financial impact would be negligible, a few cents per six pack," said Nate Broomfield, an owner of the Bucket Brewery, which opened late last year. "I doubt it would dissuade people from buying, but the principle of it only affecting beer is the real issue to me."

He added, "While this new budget will not likely affect Bucket Brewery directly, we believe it is unfair for beer consumers to bear the burden of these tax changes."

Nick Garrison, who recently expanded his Foolproof Brewing Company to Massachusetts, agreed with Broomfield.

"As a Rhode Island brewery, Foolproof is disappointed to see beer being singled out in the budget. It just doesn't make sense to us."

Elimination of the sales tax on spirits and wine will remain in place through June 30, 2015, according to a news release, and was included in the budget in an attempt to help Rhode Island liquor stores compete against those in Massachusetts, where the sales tax on alcohol was eliminated two years ago.

"This is a win for the consumer as well as those liquor stores which have lost a lot of business to their competitors in Massachusetts," said Malik. who has for the past two years worked to eliminate the sales tax on liquor in Rhode Island as a way to "level the playing field for Rhode Island's small businesses."

The changes by the General Assembly could result in a revenue loss of about $1.2 million for the new fiscal year, barring an increase in sales volume in Rhode Island, according to state legislators.

The June 2015 cutoff date gives Rhode Island officials a chance to study the impact of the sales tax elimination over the course of nearly two budget cycles, said Malik.

"That should give us enough statistical information to decide if this is a positive action, which I believe it is, or something that needs re-thinking," he said in a statement.