The Senate Monday night approved, 30-1, legislation that will switch Tennessee’s wholesale beer tax to a levy on volume rather than on price.
The current system has left Tennessee with the highest beer tax in the nation, according to the Tennessee Malt Beverage Association, which has been pushing SB422 by Sen. Brian Kelsey, R-Germantown.
The state’s present 17 percent wholesale beer tax amounts to about $37 per 31-gallon barrel and has increased 30 percent over the past ten years as beer prices have risen.
The bill effectively freezes the tax at current levels, avoiding future increases as prices rise.
“This bill will increase jobs in the brewing industry and help consumers by leading to a better selection at lower prices,” Kelsey told colleagues.
Who said the “traditionally we have taxed things in Tennessee based on their sales price” and questioned why beer should be treated differently.
Kelsey noted that beer is also subject to the state sales tax, which will continue to rise as beer prices increase, and said the legislation is needed to make Tennessee more competitive with other states in recruiting breweries.
He said the present system is particularly hard on microbreweries, which typically sell their brew at higher prices because of low volume. The tax now makes their products even more expensive, he said.
Campfield abstained on the final vote. The sole no vote was cast by Sen. Mae Beavers, R-Mount Juliet.
The bill is up for a House floor vote on Wednesday.