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Tax cut on beer to support craft brewers

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(The Center Square) — Connecticut’s craft beer makers are getting a break on their excise tax bill as part of a broader measure aimed at fostering the brewing industry.

The state’s excise tax on beer dropped by 16.7% beginning on July 1, which lowered the tax on a 31-gallon barrel of beer to $6, from $7.20 previously, and the excise tax on wine from $0.24 to $0.20 per gallon

Gov. Ned Lamont boasted that the tax cuts, which were included in a biennial state budget approved in 2021, is the latest effort by his administration to support the growth of Connecticut’s craft brewing industry.

“Connecticut’s craft brewery industry has been booming in recent years, and it is evidenced by the growth of hundreds of new local jobs,” Lamont said in a statement. “This tax cut is another way that we can support our locally-owned, small businesses.”

Connecticut has more than 120 breweries, providing 21,228 jobs in agriculture, manufacturing and retail, generating an estimated $3.8 billion in economic output, according to the National Beer Wholesalers Association and other trade groups.

The tax cuts are unlikely to be felt by beer consumers. State excise taxes are levied on the manufacturer, wholesaler, or retailer of beer, with the charges based on the quantity of beer or wine sold. In most cases, consumers don’t see the excise taxes at checkout, as it is already factored into the retailer’s sales price.

Brewers pointed out during testimony in support of the tax cut that it will help their bottom lines amid rising labor costs and expenses related to beer, wine and cider production.

In 2019, Lamont signed a package of bills aimed at supporting the craft brewery industry in the state, including an update to Connecticut’s Puritan era blue laws by increasing the amount of beer that breweries can sell off premises and allowing businesses to hold multiple licenses to make beer, wine, cider and other spirits.

In a recent Tax Foundation report, How High Are Beer Taxes in Your State?, Connecticut ranked 27th in the highest beer taxes in the nation, or $0.23 dollars per gallon. Meanwhile, Tennessee and Kentucky ranked the highest at $1.23 and 93 cents respectively. Wyoming and Wisconsin had the lowest, at $0.02 and $0.06 per gallon.

The tax cuts are also part of Lamont’s push to shake off Connecticut’s reputation as a high-tax state and attract new investment and families.

Last month, Lamont signed a $51 billion, two-year state budget that includes the “largest” income tax cut in state history.

Lamont, a Democrat, won a second term in the Nov. 8 elections after defeating Republican businessman Bob Stefanowski in a campaign that focused partly on the state’s high cost of living.

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