Federal Issues

SUPPORT A ROLL BACK OF FEDERAL EXCISE TAXES FOR DISTILLED SPIRITS

The Distilled Spirits Council of the United States (DISCUS), representing producers and marketers of distilled spirits sold in the United States, asks for your support in cosponsoring a bill that will soon be introduced by Rep. Ron Lewis (R-KY). The legislation rolls back the federal excise tax (FET) on distilled spirits by 22% percent from $13.50 to $10.50 per proof gallon.

Since 1980, federal and state governments have raised excise taxes on spirits more than two hundred times. Currently, distilled spirits are one of the highest taxed consumer products in the U.S. Over fifty percent of the cost of a bottle of spirits is attributable to taxes and fees, 19% of which accounts for the federal excise tax.

Excise Tax Reductions Will Preserve Jobs:

Since 1985, increases in excise taxes have resulted in:

• The elimination of 98,000 jobs
• Nearly $1.3 billion in lost wages
• Costs exceeding $150 million paid by state governments for unemployment benefits
• A reduction of over $1.1 billion in personal and corporate income, sales and property tax revenue to federal, state and local governments

Excise Tax Reductions Will Restore Fairness:

Excise taxes are regressive and force lower income families to shoulder a greater portion of the burden. Measured as a percentage of income, excise taxes have an impact that is five times greater for lower income families than for upper income families. At the same time, lower middle and upper income adults all drink the same type of beverage alcohol.

Excise Tax Reductions Will Not Increase Abuse:

Raising excise taxes serves only to penalize responsible beverage alcohol consumers but does nothing to deter abusers for whom taxes are of little concern. The federal government’s leading agency on alcohol issues, The National Institute on Alcohol Abuse and Alcoholism (NIAAA), underscored this point in its January 2001 issue of Alcohol Alert. NIAAA reported that the heaviest drinkers do not reduce consumption significantly in response to price increases, unlike drinkers who consume alcohol at lower levels.

To contact your Member of Congress regarding this issue, click here.

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RETAILERS EXEMPTED FROM HURRICANE RELIEF RECOVERY PACKAGE

Last December, Congress enacted the Tax Relief Act of 2005 that offers tax incentives to spur growth and recovery throughout the Gulf region in response to Hurricanes Katrina, Rita and Wilma. These benefits include, but are not limited to, bonus depreciation and increased expensing for small business property and a tax credit for the retention of employees in the disaster areas. In short, this legislation was designed to assist all businesses and their employees who were negatively impacted by these storms.

However this legislation denies tax relief to liquor stores, casinos, country clubs and other businesses that provide employment and drive economic activity throughout the region. Thousands of Gulf Coast businesses – some big, but many small and family-owned – have now been deprived of tax benefits for expensing equipment purchases and hiring or retaining employees in the hurricane disaster zones. These business owners pay billions of dollars in taxes and should be entitled to the same disaster relief as everyone else affected by natural disasters!

Representative Frank Wolf (R-VA), and close to sixty of his colleagues in the House of Representatives, sent a letter to the White House on October 12, 2005 which expressed concern that the gaming industry would receive tax incentives as part of the economic recovery package. Wolf claimed that his group of Republican Members would not be able to support a final tax bill unless these businesses were excluded.

The Distilled Spirits Council (DISCUS) staff spent much of December fighting against enactment of this legislation. Needless to say, DISCUS will be working with retailers and other industry organizations to reverse this discriminatory legislation and make certain it is not repeated in subsequent tax bills. Please check back as we will post information regarding any activity surrounding this issue as it becomes available.

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