USA, Ohio: The House Finance Committee that increasing the state excise tax on beer from 18 cents per gallon to 36 cents would drive customers to Indiana and Kentucky, where rates are 8 and 12 cents, respectively, Enquirer Columbus Bureau stated on March 18. The increase would translate to 41 cents more per case of beer. The increase is part of Gov. Bob Taft's tax plan and is being debated with the two-year, $51.3 billion state budget. Taft also is proposing wine and cigarette tax increases.

If state lawmakers want to make Ohio more competitive and create more jobs, doubling the tax on beer will work against those goals. That was the message from a Southwest Ohio beer distributor and the Miller Brewing Co., which employs more than 600 people at its Trenton brewery in Butler County.

"My sales territory borders Indiana," said John Dickerson, chief executive of Dickerson Distributing Co. in Monroe, a 60-person company that sells 3 million cases of beer annually in Butler, Warren and Preble counties. "I expect to lose more than 6 percent of my sales because the border areas will experience higher-than-average declines," he said.

Speaking on a day dominated by testimony from local government officials sporting big yellow buttons to protest funding cuts, lobbyists for Miller told the House Finance Committee about a company study showing Ohio's beer tax is already uncompetitive.

Terrence O'Donnell, a lobbyist for Miller, said the study found Ohioans already buy 3.25 million cases of beer annually from neighboring states. If the tax doubles, he said, the study estimates that will increase to 4.1 million cases.

The Kentucky House recently voted to approve an increase in the tax paid by wholesale beer distributors. Gov. Ernie Fletcher had proposed a more aggressive 6 % sales tax on beer, wine and liquor.

O'Donnell said he understands the need for Ohio to raise revenue, but argued that the tax should be more broad-based. "Doubling the beer excise tax disproportionately places the burden of balancing the next biennial budget on one segment of Ohio industry," he said. Thus far, legislative leaders have shown no signs that they are willing to make big changes to Taft's tax plan, which also significantly alters business taxes and cuts the state income tax by 21 percent.

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .