UPDATE 10/2/18:
Due to the efforts of the Brewers of Pennsylvania and the Task Force on PA Sales Tax appointed by BOP President Chris Lampe, the Pennsylvania Department of Revenue has agreed to extend the effective date of its Sales Tax Bulletin dated July 27, 2018 until July 1, 2019.
This means that direct sales tax to customers at breweries and tap rooms will remain sales tax exempt until July 1, 2019.
The additional delay in enforcement will allow the Department and the Brewers of Pennsylvania more time to evaluate an appropriate sales tax collection method and rate, and to properly update the Tax Reform Code.
The BOP Task Force on PA Sales Tax consists of BOP Members:
Trevor Prichett, Yards Brewing Co
Chris Trgner, Troegs Brewing Co.
Scott Smith, East End Brewing Co.
Jason Lavery, Lavery Brewinig Co.
Mark Edelson, Iron Hill Brewing Co.
Chris Lampe, Weyerbacher Brewing Co.
Ted Zeller, BOP General Counsel
Our Original Article:
On July 27th, 2018 the PA Department of Revenue decided on new alcohol taxation that will change how much YOU as the consumer are charged at your favorite brewery.
Read the full announcement from the PA Revenue Department
Effective January 1st, 2019, breweries will be required to collect the state’s 6% sales tax on every portion sold (pints, growlers, etc). This will increase the amount YOU spend at your local breweries.
Basically all draft pours at PA breweries would be taxed roughly .36 on a 16oz pour. There’s no reasoning as to why this new taxation was introduced. It seems like this is the state trying to capitalize on the increase in craft beer being produced to take advantage of the economic boom that is PA craft beer.
As breweries try to figure out how to absorb this cost, or if they’re forced to pass it on, this ultimately means you as the consumer will be hit the hardest.
Direct quotes from Pennsylvania Breweries:
“For years, PA breweries have enjoyed a sales-tax exemption from the state and the results are that PA ranks 2nd in the nation in beer sales and the positive economics that result from that. The state clearly wants additional revenue, but I’m concerned a formal study as to the negative impact of implementing this was not performed. I applaud recent legislative changes that have positively influenced our state’s craft industry, however this latest proposal is misguided and will most likely slow growth, impact employment and potentially decimate the smaller micro and nano producers in the state.”
– James Adams, Co-Owner of Levante Brewing (West Chester, PA)
“…we can only absorb so much of the taxes and fees associated with brewing, so a portion of this tax increase will have to, unfortunately, be passed on to the consumer.”
– Ian Staab, Owner of Yellow Bridge Brewing (Delmont, PA)
“We do not think it is fair that the DOR has chosen to impose four-times the tax on breweries than on restaurants, convenience stores, or grocery stores. Don’t forget there is an additional special tax reserved to breweries called Pennsylvania Excise Tax that restaurants, convenience and grocery stores (or, for that matter, wineries, and distilleries) do not pay. Yes, only beer has a special production tax in Pennsylvania, and now it has a special, punitive sales tax policy.”
-Theodore J. Zeller, III, Brewers Of PA Counsel
“Taxes are part of owning a business, however, with this directive from the Department of Labor it is clear that they have not researched the impact this mandate will have on one of the largest manufacturing industries in Pennsylvania. Parity in taxation is a fair ask, but what they are demanding from our industry come January 1st isn’t on par with our compatriots in the retail alcohol market. Breweries are being praised by our communities, and elected officials alike for the revitalization they spur, the monies reinvested into local communities, and the sheer amount of quality career jobs they create. This unfair tax structure imposed on PA’s breweries will only serve to strip mine those assets, stifle job creation, and confuse the consumer. The Department of Labor can do better than this, and they should.”
–Brandalynn Armstrong, Co-Owner Zeroday Brewing (Harrisburg, PA)
“Our expectation is that they will apply whatever method used for beer, to wine and spirits…or at least, that’s what the senator has asked them to do.”
-Scott Smith, Owner of East End Brewing (Pittsburgh, PA)
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How does this make you feel?
We encourage you to write to both your local State Senators and State Representatives so they can tell the PA Department of Revenue this new taxation is NOT OKAY!
We have created a sample letter you can use to send to your Senator and/or Representative. You can download a Word Version of the letter here.
