Craft brewers and consumers across the state recently celebrated a small victory.
On July 1, the Pennsylvania Department of Revenue was set to apply a 6 percent sales tax on every dollar to beers sold at registered brewpubs and taprooms in Pennsylvania’s 67 counties.
But a few days before the new tax was scheduled to kick in, Gov. Tom Wolf signed House Bill 262 to amend the rate. The revision, which goes into effect Oct. 1, requires breweries to charge state sales tax on just 25 percent of the retail price.
According to the new law, that 25 percent tax will be implemented based on a 6 percent tax of the initial rate, meaning that for a $5 pint the assessed retail price would be $1.25 and the 6 percent tax would equate to an increase of 7.5 cents.
The owners of White Township’s two brewpubs — Noble Stein and Levity — said they are pleased with the last-minute revision.
“It is definitely a win for consumers,” said Jay Herman, co-owner of Levity Brewing. “It is still an added tax, however, (but the) win is in contrast to the threat of the larger tax that was proposed.
“The Brewers of Pennsylvania (BOP) did an excellent job working with legislators and the governor to reach a compromise for both sides on this thing,” he said.
Under the law that was delayed six months because of heavy opposition from brewers and nixed by Wolf, brewpubs would have faced a 6 percent tax increase at the beginning of July that would have pushed the cost of a $6 pint to $6.36.
Yet, the same craft beer wouldn’t have been taxed at a restaurant.
That was worrisome to both Herman and Zack Morrow, co-owner of Noble Stein Brewing, who were concerned about the direct hit their customers would have had to absorb.
“The way the tax was reduced put us more in line with bars and restaurants as far purchasing craft beer goes, and that’s encouraging,” Morrow said. “It’s a more level playing field with how the industry is and works. It’s a lot easier for a small business like us to absorb a (revised) tax like that. The (previously proposed) tax would have put a heavier tax burden on all of us. It wouldn’t have been good.”
Chris Lampe, president of the BOP, the state’s official brewers’ guild, said his organization spent 18 months working with legislators and Wolf’s office to make sure the new tax rate would not cripple craft beer’s momentum statewide.
“The Brewers of Pennsylvania, in conjunction with the governor’s office, were able to bring fairness and parity to sales tax collection among restaurants, taverns, grocery stores, and brewery taprooms across Pennsylvania,” Lampe said of the HB 262, passed June 28 by the Pennsylvania General Assembly in Harrisburg.
Levity, along Indian Springs Road, opened in January 2016. It was the first brewery to open in the Indiana area since 1939.
Noble Stein, along Wayne Avenue, opened in October 2016.
The Brewers Association, a national organization for small and independent brewers, reported Pennsylvania’s craft beer industry ranked first in production as of 2017 with 3.7 million barrels, second in economic impact at $5.8 billion and sixth in total breweries at 282.