(The Center Square) – Alaska has the second-highest beer tax in the nation, according to a report from the Tax Foundation.
The state levies a tax of $1.07 per gallon of beer. Tennessee is the only state with a higher beer tax than Alaska, at $1.29 a gallon.
Alaska does not have a sales tax, but some local cities and counties do. In some municipalities, local sales taxes are as high as 8%.
The Tax Foundation, an independent tax policy nonprofit, compiled the report to see where consumers pay the highest taxes for their beer.
According to another 2005 report, the layers of taxation on production and distribution make up nearly 40% of the retail price for beer.
“Taxes are the single most expensive ingredient in beer, costing more than the labor and raw materials combined,” according to a statement from the Beer Institute.
However, consumers may not realize how much taxes have contributed to the final price of the beer they purchase.
“State excise taxes are often levied on the manufacturer, wholesaler, or retailer of beer,” the report said. “The states collect these excise taxes according to the quantity of beer sold (usually expressed as a rate of dollars per gallon). In these cases, consumers won’t see the tax as an additional excise tax at checkout; the tax will already be priced into the retailer’s sales price.”
In Alaska, the combined cost of excise taxes, general sales taxes, license and other fees, fines and penalties on beer is $12.76 per proof gallon, according to the Distilled Spirits Council of the United States.
Alaska raised taxes on alcohol in 2002. That’s when the beer tax went from $0.35 to $1.07 – an increase of 72 cents. Taxes on other alcoholic beverages went up as well. Wine taxes went from $0.85 to $2.50 and taxes on liquor with greater than 21% alcohol volume increased from $5.60 to $12.80, according to the Alaska Department of Revenue.
These alcohol tax hikes were “more than fully passed through to beverage prices,” according to a study on the increases published in the American Economic Association Journal. That means consumers took the brunt of the tax hikes.
Wyoming and Colorado’s lowest beer excise tax rates were $0.02 per gallon, the lowest in the country. Beer taxes in Pennsylvania and Oregon are $0.008 per gallon.
Other states with the highest beer taxes were Kentucky and Hawaii, at $0.93 per gallon, according to the report.
