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Craft brewers assail proposed beer tax hike

SANTA FE, N.M. — The tax on beer sold in New Mexico would increase 7.5-fold in July under a proposal introduced last week at the Roundhouse.

Sen. Cisco McSorley, D, Albuquerque, is the sponsor of the legislation, Senate Bill 314, which would raise the excise taxes on beer, wine, cider and spirits.

The beer tax rate would climb the most, jumping to $3.08 from 41 cents per gallon, sparking concern from the local brewing industry. An exception that assesses lower tax rates on craft brewers would remain in place up to a certain threshold. But local beer-makers would be subject to the higher rate once they sell more than 15,000 barrels per year in the state.

Most New Mexico breweries now make less than 15,000 barrels, but New Mexico Brewers Guild Executive Director John Gozigian said the bill could have the unintended consequence of thwarting growth.

“Basically, just when a brewery is at a point where they’re going to start exporting and creating economic base jobs is when they really get hit,” Gozigian said.

Marble Brewery President Ted Rice – who expects his Albuquerque company to make 25,000 barrels of beer this year – said passage would hurt Marble’s market competitiveness, force the company to raise prices at its taprooms and limit his ability to raise pay for his 110 employees. He called the proposed hike “just so over-the-top and extremely unreasonable.”

McSorley has not returned messages from the Journal .

The guild wants to arrange a meeting with McSorley to discuss the industry’s concerns, which Gozigian said also include a plan to raise taxes on all cider – a product many local breweries also manufacture – to $3.08 from 41 cents, regardless of the amount produced.

The bill also would raise the excise tax on spirits to $7.24 per liter from $1.60. The wine tax would increase to $2.14 per liter from 45 cents. However, the lower rates currently in place for local wineries would not change until they make and sell more than 1.5 million liters.

Meanwhile, the measure also includes a provision adjusting the excise tax rate based on changes to the consumer price index rate for the Western region starting in 2021.

Critics of the legislation may have a backstop, as Gov. Susana Martinez has vowed to veto any tax increases approved by the Legislature.