A proposed rise in beer tax in Wisconsin has me scratching my head. Now, I understand that nobody likes new taxes, and no beer drinker wants to pay more for the beers they enjoy, but the math on this one has me confused.
Here’s the deal: the state is proposing the first rise to their beer tax in some 40 years, bringing it from $2 to $10 per 31 gallon barrel. This works out to about 2.4 cents per bottle, which certainly doesn’t sound like much to me, but here’s where it gets confusing. Brewing industry representatives are saying that by the time the increase reaches consumers, that 2 cents per bottle will have turned into 12 cents, “as the product is passed through distributors and retailers.”
I don’t get it. If there is a rise in tax of under 2 ½ cents per barrel, that seems to me as simple as a rejigging of price, so a six-pack, say, will cost distributors 15 cents more. There is no added cost to the distributor other than this 15 cents, so why should that same six-pack cost retailers anything more than 15 cents extra? And since there is likewise no extra expense for retailers, other than that 15 cents, why should it cost Wisconsonites (Wisconsonians?) anything more than and extra 15 cents per six?
If the industry is saying that the tax increase will lead to a 72 cent increase in the price of a six-pack, aren’t they really just saying that retailers and distributors will take advantage of the tax increase in order to take a cash grab of more than half a buck per six? And isn’t that a problem with their distribution system, rather than with the tax itself?
And why don’t we hear similar stories when the breweries decide to uniformly raise their prices, as they sometimes do? Nope, then, for some reason, we only ever hear about the “small increase” they’re making in order to cover rising costs.