(TNS) — I recently received two separate releases from two different organizations pertaining to the beer industry that, while about different topics, were somewhat related.
First, the Colorado-based Brewers Association released its 2018 Economic Impact Report. It says the craft brewing industry contributed $79.1 billion to the U.S. economy in 2018, roughly 0.4% of gross domestic product. The 2018 numbers mark a 4% increase from 2017, highlighting the industry's steady performance across the country.
The calculation is derived from the total impact of beer brewed by craft brewers as it moves through the three-tier system (breweries, wholesalers and retailers), as well as all non-beer products such as food and merchandise sold in brewpub restaurants and brewery taprooms.
The craft brewing industry provided 559,545 total jobs in 2018, with 150,055 jobs directly at breweries. In addition, more than $5 billion in wages and benefits were provided to brewery employees through 2018.
“With small breweries in every state and nearly every congressional district in the country, craft brewers are a vital and growing part of the economy in cities and towns all across the country,” said Bart Watson, chief economist of the Brewers Association. “Beer lovers are spending their dollars by supporting small and independent brewers in their local communities and across the country, and its positive impact is evident nationwide.”
Craft beer's economic impact is especially significant in Pennsylvania. The Keystone State ranks second (behind California) in total economic contribution, with $6.3 billion, and fourth in contribution per capita for adults 21 and over, with $657.
Pennsylvania also ranks first in craft beer produced, with 3.72 million barrels, and sixth in number of breweries, with 354,
Which brings us to the second release I got: an announcement that a new tax on Pennsylvania brewery sales went into effect on Oct. 1.
I've chronicled this saga for over a year now. To recap, the Pennsylvania Department of Revenue announced last year that, effective Jan. 1, 2019, breweries that sell beer to customers from a taproom would have to start charging a 6% sales tax. Previously, brewery beer sales were exempt from sales tax.
Many of the state's more than 300 breweries opposed the tax because it would have treated breweries differently than bars and restaurants and because it was a unilateral decision from the Department of Revenue and not a new law passed by the state legislature.
Due to backlash from breweries, the department delayed the implementation of the tax change until July 1 to see if something could be worked out.
Something was worked out. Brewers of Pennsylvania, the state's official brewers guild, worked with the Department of Revenue, Gov. Tom Wolf's office and the legislature to come up with a compromise.
So, starting on Oct. 1, Pennsylvania breweries were required to begin collecting a “use tax” on all direct sales to consumers, whether those sales are for on- or off-premise consumption. But instead of a flat 6% tax on sales, the law requires breweries to charge Pennsylvania's sales tax on 25 percent of the retail price.
For most breweries, the new tax means reporting and paying 1.5% of the retail sales to consumers to the Department of Revenue. (Breweries in Philadelphia and Pittsburgh must pay more.) So if a brewery charges $6 for a pint of beer at its taproom, it must pay the state 9 cents.
As an added kicker, the new law specifies that breweries cannot show this tax on receipts to customers.
So there you have it: Craft breweries, specifically those in Pennsylvania, are doing well so the state decides it's time to tax them more.
©2019 the Reading Eagle (Reading, Pa.). Distributed by Tribune Content Agency, LLC.