The Idaho “robust beer” tax invoice continues to advance Orchards, Nuts & Vines

The State Affairs Committee of the Idaho Senate approved a bill on March 17th that redirects the tax revenue for “strong beer” from wine to hop commissions and compensates the former for a transitional period.

House Bill 232 reviews the strong growth of the state’s hops and beer industries in recent years while recognizing the role of the Wine Commission in maintaining the sector’s decades-long dynamism. The committee voted to send it to the entire Senate with a do-pass recommendation. The entire House of Representatives passed it on March 10th at 40-29-1.

Senator Carl Crabtree, R-Grangeville, said HB 232 establishes the current law treating strong beer as wine and is right to pass the funds on to the beer industry, while the Idaho Winemakers and Winemakers Commission remains intact.

Representatives from the hops, beer and wine industries have been in favor of the bill for more than three years. Wine reps said that while their industry is economically significant, it is relatively isolated and still small enough to value any research and marketing dollar.

Jeremy Pisca of the Idaho Beer and Wine Distributors Association said he was neutral on HB 232 but concerned that a heavy beer tax may be used to lobby the legislature.

David Arkoosh of the Idaho Beer Alliance rejected the bill. He said beer and wine taxes should be separated, and the Idaho Hop Growers Commission does not have a strong enough connection with beer or the legal authority to promote it.

He told Capital Press that better options would be to pass a heavy beer tax on to a government agency that is already promoting beer, like the Department of Agriculture’s Idaho Preferred program, or adding a language to the bill to let the Hops Commission know what she can do with the funds.

Senator Grant Burgoyne, D-Boise, said the Hops Commission’s Enabling Act should be amended to clearly state that it can market beer. His motion to send the bill to amend it was not supported.

Senate Majority Leader Chuck Winder, R-Boise, offered the Do-Pass application. The calculation is not perfect, but it does reflect industry hard work, he said.

The 1988 legislation considered beer with more than 4% by weight alcohol (5% by volume) to be as strong and taxable as wine. A 1994 law authorized the Wine Commission to receive 5% of total wine excise tax on wine sold in or outside the state.

HB 232’s letter of intent states that almost half of all wine excise taxes come from heavy beer sales.

The tax revenue from strong beer would be gradually redistributed from wine to hop commissions: 1.5% in the first year, 3.5% in the second and 5% in the third and thereafter. The Wine Commission over the same period would make up for the difference by imposing the excise duty on wine produced and sold in Idaho at an increasingly higher rate.

The bill’s financial note states that the change is expected to reduce the state general fund by $ 37,413 in fiscal 2022, by $ 89,216 in year 23, and by $ 143,896 in year 24.