Nebraska proposes 287% tax hike on spirits

The Distilled Spirits Council of the United States (Discus) has criticised a “completely misguided” tax hike proposed by the Governor of Nebraska.

Nebraska Governor Jim Pillen pitched his property tax plan on 24 July ahead of an expected special legislative session.

If passed, his plan would increase the current excise tax rate for distilled spirits by 287% from US$3.75/gallon to US$14.50/gallon.

Discus has calculated that 1,350 Nebraskans would lose their jobs as a result of the proposed tax increase.

The 287% hike would also make Nebraska’s tax rate for spirits the second highest among licensed US states. Discus has warned that this could reduce retail sales by $110 million.

Adam Smith, Discus vice president of State Government relations, argued that increasing taxes by more than 280% was “completely misguided”, and pointed out that the industry is still not fully recovered “from the devastating impacts of the pandemic”.

He said: “These taxes will be passed on to consumers in the form of higher prices. Higher prices will lead to a loss in sales, and a loss in sales will lead businesses to cut employment.”

The proposal would nearly quadruple beverage alcohol taxes in Nebraska, even though distilled spirits are already highly taxed in the state. For a typical bottle of distilled spirits purchased in Nebraska, more than 44% of the retail cost already goes to pay a tax or fee of some kind.

“This massive tax increase would have a chilling effect on the spirits industry that would ultimately have far reaching implications for others including local farmers, manufacturers and hospitality businesses,” said Smith. “The legislature should protect consumers and small businesses by rejecting this increase on alcohol taxes.”