EagleTribune.com, North Andover, MA

January 15, 2013

Beer tax plan raises border war concerns

Proposal would increase beer tax 33 percent

By John Toole

---- — Opposition is brewing to a bill in the Legislature that would hike the state beer tax by 33 percent.

Reps. Charles Weed, D-Keene, and Richard Eaton, D-Greenville, proposed increasing the tax from 30 to 40 cents per gallon to raise an estimated $4.3 million for prevention and treatment of alcohol abuse.

Brewers, distributors and grocers are concerned House Bill 168 could hurt their sales and the New Hampshire economy, negatively affecting consumers, the workforce and state coffers in unintended ways.

They warn the big tax increase would cause cross-border shoppers who use stores in Southern New Hampshire to consider reserving their spending for back home in Massachusetts, a blow to both supermarket chains and mom-and-pop businesses.

“The real threat is to jobs and the economy long term,” said Scott Schaier said, executive director of Beer Distributors of New Hampshire. “This is bad timing and bad for business.”

Officials in the neighboring states of Massachusetts, Vermont and Maine are probably salivating over this bill, Schaier said.

“This means more money will be coming to their coffers, not ours,” he said.

The beer tax is 11 cents a gallon in Massachusetts, 35 cents in Maine and 27 cents in Vermont.

John Dumais, president of the New Hampshire Grocers Association, said grocers get 50 to 60 percent of their business from neighboring states so a beer tax increase is concerning to them.

Consumers, worried about the economy and their jobs, could choose to refrain from spending or spend out of state, Dumais said.

That would hurt New Hampshire grocery stores that might then decide they can’t expand or hire, he said.

“It would be a downward spiral,” Dumais said.

The tax hike could be a blow not just to a large brewer like Anheuser-Busch in Merrimack, but also microbreweries and craft brewers — and the tourist trade they attract. Portsmouth is home to two popular craft breweries, Smuttynose and Redhook.

“They are really worried this is going to hit them hard,” Schaier said.

Though the tax directly affects whole distributors, manufacturers and brew pubs, business advocates say the expense ultimately would be passed along to consumers through prices at a time when they can least afford it.

“This would be tough for consumers to absorb now,” Schaier said.

Sherry Williams, one of the owners of Hampstead Center Market, said a beer tax increase would be bad for business and customers.

“We’d have to pass it on to the customers,” Williams said.

She said she hopes the Legislature isn’t in a hurry to raise the beer tax.

“The Patriots’ game might not have a lot of sales,” she quipped.

While opposition is building, the bill’s fate is in the hands of political leaders in Concord.

“I think it all depends on the leadership of the House and the leadership of the Senate and the governor’s office,” Dumais said.

The legislative rank-and-file may have trouble with the tax hike, too.

“I’m more likely to oppose any increase,” said Rep. Patrick Bick, R-Salem. “Down here at the border we depend so much on the customers coming over.”