The North Dakota legislature rejected a bill that would have reduced the tax rate on distilled spirits products below 12.5% alcohol to the same level as wine.
The rejection was praised by the Beer Institute. “Legislators were wise to reject this handout for big liquor – saving significant tax revenue while protecting North Dakotan brewers, agricultural suppliers and consumers. We also know from the experience in Nebraska and Michigan, where similar legislation was enacted in 2021, that these tax cuts don’t result in lower prices for consumers at the store,” said Brian Crawford, president/CEO.
In a letter to the North Dakota Finance and Taxation Committee, Crawford along with the CEOs of the Brewers Association and the National Beer Wholesalers Association noted that Nebraska in 2021 reclassified spirits drinks below 12.5% ABV as wine for tax purposes. Not only did the state lose an estimated $1 million in tax revenue annually, but "the average price of ready-to-drink liquor-based cocktails went up 65% in Nebraska since the bill was passed (from an average of $5.83 to $9.62), far more than the inflation rate during that time period."
It is "vital" that beer, wine and spirits be maintained as separate and distinct categories "due to the notable differences in these products and the way they are consumed. . . Beer, wine and liquor are not the same, and this legislation would send a confusing message to consumers," the three association executives said.