USA: The perspective of increased beer taxes in Iowa meets disapproval from beer distributors

Iowa Governor Tom Vilsack's proposed to increase the tax on the alcoholic beverage, officials say. Thus, a six-pack of beer would probably cost about 6 cents more. Governor Tom Vilsack proposed a beer tax increase on January 5 as a way to help craft his state budget, according to local media. He said 10-cent-per-gallon increase would raise about $7 million for the state's general fund.

The Democratic governor stated the idea is in response to critics who have said it was unfair of him to seek a tax increase on cigarettes but not beer. Beer distributors and restaurant associations stated that such a proposal would hurt business and that the tax paid by retailers would get passed on to the customer.

Under the plan, the 19-cent-a-gallon tax collected on beer that wholesalers sell to retailers would increase by 10 cents a gallon to 29 cents. The beer tax was last increased in 1986, by 5 cents.The Iowa Alcoholic Beverages Division estimates the increase would amount to about 1 cent extra for a 12-ounce beer.

The Iowa Wholesale Beer Distributors Association wasn't pleased to hear the proposal. The group's executive director, Sheila Douglas, said a tax increase would hurt small businesses in Iowa, in particular ones that compete with companies in neighbouring states.

"We will oppose that," she said. "Iowa wholesale beer distributors are small, family-run businesses. One-third of Iowa's population lives in border communities. If there is an increase, the beer wholesalers would not be competitive."

Doni DeNucci of the Iowa Restaurant Association said any increase in the tax to retailers would surely find its way to customers.

Bob Fahr of Fahr Beverage Inc., who distributes Anheuser-Busch beers throughout central Iowa, doesn’t as well support the initiative. He said history has shown customers will cross the state line to buy cheaper beer if prices increase.

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