The state’s largest and oldest active brewery doesn’t typically take political positions, but on Tuesday night, one of its co-founders told the Alaska Senate’s Labor and Commerce Committee that the Juneau-based company opposes a proposal to double Alaska’s alcohol taxes.
The tax increase, Senate Bill 131, is one of nine bills proposed by Gov. Bill Walker to erase the state’s $3.7 billion deficit. It would make Alaska’s alcohol taxes the highest in the country, at 20 cents per “drink,” a term that covers 1 ounce of liquor, 5 ounces of wine, or 12 ounces of beer.
Most beer produced in Alaska falls under a small-brewery exemption that taxes the first 60,000 barrels produced each year at 3.3 cents per drink. That tax would also be doubled.
“If we raise the taxes that much, you will be able to purchase it in Oregon for less than you can purchase it here, where it’s made. That’s a direct hit to our consumers here,” said Marcy Larson of Alaskan Brewing. “It’s very frustrating.”
Larson said the biggest effects won’t be on the alcohol producers — brewers and distillers — but on the people who sell alcohol, restaurants, bars and package stores.
“I feel that the extreme nature of the doubling of the tax will affect the hospitality industry and make it no longer hospitable,” she said.
“A healthy hospitality industry is what all producers need to survive,” explained Alaskan Brewing spokeswoman Melissa Griffiths on Wednesday. “It’s not just the producers, it’s about the whole industry.”
Larson’s comments came as the Labor and Commerce Committee listened to Alaskans’ opinions for about 50 minutes Tuesday night. The committee also heard an hour of testimony on a proposed tobacco tax increase.
Michael Cervantes, owner of the Banks Alehouse in Fairbanks, stocks beer from 15 of Alaska’s 25 operating breweries at his restaurant. He said a tax increase will create “a ripple effect.”
“I employ 55 employees at this point in the time, but at the end of the day, if I have to push that tax off on my consumers, they’re going to look somewhere else,” he said.
Rick Armstrong, owner of Baranof Island Brewing Company in Sitka, said there’s a ripple effect for producers as well. “You will be placing a burden on the one small industry in Alaska that is growing,” he told committee members.
Pamela Watts, a member of the Alaska Behavioral Health Association in Juneau, said alcohol’s ripples have negative effects, too.
“I can attest to the damage alcohol has caused,” she said. Watts has worked in alcohol abuse treatment and rehabilitation for more than 30 years.
“Alaska has the distinction of being, in my opinion, the most beautiful place on Earth,” she said. “Sadly, we have the distinction of being first in the nation or near the top in alcoholism, alcohol-related deaths, fetal alcohol spectrum disorder, alcohol-related domestic violence, rape and suicide. … Fixing those problems takes money.”
