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Sin Taxes on Alcohol and the Revenue Generated

By - August 15, 2016 | Alcoholic Beverage Law | Email Rob Pinson

With a presidential election upcoming, you can expect tax policies to be subject to heightened scrutiny. Proposing a tax increase of any kind is usually bad for any delegate’s political career – most of the time. Specifically, I’m talking about the so-called “sin taxes” that only apply to certain industries such as tobacco, gambling, and of course alcohol.

Increasing sin taxes is more or less acceptable to the public because part of their purpose to reduce the consumption of goods and services considered harmful. In some states, sin taxes are a major source of revenue. According to cost information website HowMuch.net, the state of Texas generated more than $1 billion in revenue from alcohol taxes in 2014. The runners-up were Florida, with $452 million and New York with $250 million.

That same year, Tennessee took in almost $148 million from alcohol taxes, accounting for about 1% of the states total tax revenue. I’m no tax expert, but that sounds low to me. Perhaps the state is comparatively lenient on the alcohol industry since producers of fine spirits are part of the state’s cultural history.

But that doesn’t mean those producers have it easy when it comes to taxes. They’re also subject to federal excise taxes (FET) on distilled spirits – which account for more than one-third of the shelf price of most alcohol brands when combined with state-levied taxes. Luckily, there is a chance those FETs could be reduced if the issue is given enough support. That’s something to keep in mind during this political season.

Robert Pinson

Robert Pinson

Robert “Rob” Pinson concentrates his practice in the areas of business law, tax law, estate planning, alcoholic beverage law and campaign finance law. As a Tennessee tax attorney, he has represented clients in stock and asset sales, tax audits and tax disputes. He also regularly goes before the Tennessee Alcoholic Beverage Commission and numerous Beer Boards on issues related to Tennessee alcohol laws. In addition, he has advised clients on tax strategy, estate planning, asset protection and campaign finance reporting.
Robert Pinson
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