CHEYENNE — Members of the Wyoming Legislature’s Revenue Committee expect a full house when they discuss a proposed increase in the state tax on beer Friday in Buffalo.
The state hasn’t increased the tax since it was levied at two cents a gallon in 1935. It’s currently the lowest beer tax in the nation.
Lawmakers will decide whether the tax should be increased to raise money for substance abuse treatment, as proposed by Sen. Ray Peterson, R-Cowley, chairman of the Senate Revenue Committee.
Beer tax collections have been flat in recent years, averaging about $265,000 per year.
Rep. Mike Madden, R-Buffalo, the chairman of the House Revenue Committee, is interested to hear a report Friday on how much it costs the state to collect the tax.
Collection costs may be so high, he said, that the revenue doesn’t warrant the price of collecting it.
“In my opinion, you can either raise it or get rid of it,” said Madden, an economist.
One extreme option would be to increase the tax to its real current value compared to living costs in 1935, when a loaf of bread cost a nickel. If that approach were taken, the tax would be increased to 33 cents per gallon.
“I know we’re not going to be doing that,” Madden said. “Nobody has the nerve to do that.”
The current tax amounts to .18 cents on a 12-ounce bottle of beer with a mythical price of $3. Even if the Legislature quadruples the tax on that bottle of beer, it would total 0.72 cents — less than a penny.
Madden said the committee may decide to leave the tax at two cents per gallon.
The main argument against a tax boost is that beer is the working man’s drink, and a hike would mean little revenue to the state but would create considerable ill will among beer drinkers.
Pat Higgins is the owner of Orrison Distribution Co. in Cheyenne, one of 15 beer wholesalers in the state. He is scheduled to testify against an increase in the beer tax on Friday at the Hampton Inn in Buffalo.
Higgins said surrounding states haven’t raised their tax on beer in recent years.
“The reality is that if the tax goes up, the price just gets raised and Joe Sixpack pays the price,” Higgins said.
He said that in general, Wyoming retail beer prices are fairly competitive with surrounding states that have a higher tax. Colorado’s beer tax is eight cents per gallon, for example, and was last raised in 1986.
Higgins said beer is cheaper in Scottsbluff, Neb., where stores such as Walmart, Safeway and Albertson’s all have liquor licenses.
Higgins services Torrington, which doesn’t have a major-chain grocery store.
Residents from Torrington, Lusk and Guernsey go to Scottsbluff to buy everything from clothes to cars to beer, he said.
“We’re fairly competitive, given the drawback of a small-population state,” Higgins said. “If you’re a retailer operating in Lusk, there are only so many people in Lusk.”
Higgins said Wyoming retailers are under pressure to be price-competitive with new products, including craft beers and flavored vodkas.
Legislative leaders who sit on the Management Council, the Legislature’s administrative arm, added a study of taxes on liquor and wine to the Revenue Committee’s interim duties.
Madden said the committee will be asked to delay discussion of an alcohol tax until its October meeting.
Wyoming is a liquor-control state that acts as wholesaler of distilled spirits and wine through the liquor warehouse in Cheyenne. The revenue for the state is generated by the markup in the price to the retailers who buy the products.