TENNESSEE TAX PROPOSAL UNWARRANTED ATTACK ON STRUGGLING HOSPITALITY AND TOURISM INDUSTRY
WASHINGTON, D.C., June 13, 2002 – A tax proposal calling for an 80 percent increase on beer, wine and spirits was blasted today by the Distilled Spirits Council as “an unwarranted attack on a home-state industry that employs thousands and contributes significantly to Tennessee’s heritage, culture and economic well-being.” “The distilled spirits industry generates thousands of jobs, millions in wages and more than a billion in economic activity for the state,” Distilled Spirits Council President Peter H. Cressy pointed out. “In return, Tennessee has the highest spirits tax in the region and is now looking to almost double it. We’ve paid more than our fair share, and it’s time for the legislature to look elsewhere.” Based on an economic analysis by the Distilled Spirits Council, the proposed tax increase on beer, wine and spirits would reduce economic activity by over $120 million and cost more than 1,500 people their jobs. Under the proposal, the spirits tax would increase from $4.00 to $7.20 per gallon. It is estimated that spirits prices will increase by almost 10 percent. Tennessee’s spirits excise tax is currently the highest in the region. The proposed rate increase would make Tennessee’s spirits tax the second highest in the country and nearly double the national average. Cressy noted that the tax on distilled spirits products is already at such a high rate that any additional tax will cause responsible consumers to simply buy less or force them across state borders to purchase their products at a lower price. The Council’s analysis estimates that restaurant, tavern and liquor store sales would be reduced by approximately $40 million. “During these tough times, the legislature should be working with the industry to protect and enhance the state’s struggling hospitality and tourism industry,” said Cressy. “It doesn’t make good fiscal policy to further tax an industry just as it is getting back on its feet.” Cressy noted that since 1985, the distilled spirits industry has been burdened with two federal excise tax increases and spirits products sold in Tennessee are subject to four other taxes including the highest gross receipts tax in the country. “When a consumer buys a bottle of spirits in Tennessee almost forty percent of the purchase price goes to a tax of some kind,” said Cressy. “These responsible consumers should not be further penalized.” Further, according to government studies, raising alcohol taxes does nothing to deter irresponsible consumers. The Distilled Spirits Council of the United States is the national trade association representing producers and marketers of distilled spirits sold in the United States.