Patrons at some Pennsylvania brewpubs may have noticed recent price increases as a state use tax on brewers took effect Sept. 30.
On a $6 beer served at a brewpub in Philadelphia, the tax is 12 cents, paid by the brewer.
The use tax, imposed on a quarter of a brewery’s retail sales, may not be directly passed along to customers as a line item on the receipt, as sales taxes are. Some brewpubs have elected to absorb the tax, while others have factored it into price increases.
Dave Goldstein of Urban Village Brewing Co. in Northern Liberties said his company raised prices on the beers that are pricier to make by 50 cents to $1. He said he hoped that this would cover production costs as well as the tax on all the beer sold.
Tess Hart, an owner of the new Triple Bottom Brewing Co. in the SpringArts section, said the brewery was absorbing it “and will see how it goes.”
Many brewery owners declined to comment on their reaction to the tax.
The Brewers of Pennsylvania, the state’s official brewers guild, backed the legislation, calling it a “celebration” for brewers. The group helped to lobby legislators to reconsider a 6% sales tax that it said “would have severely slowed the craft beer momentum in Pennsylvania.”
By taxing 25% of retail beer sales, the guild says, the legislature has balanced a tax assessment as if it is being assessed on the wholesale price amount and is similar to what restaurants, taverns, and grocery stores pay. Other county sales taxes apply.
The tax is calculated by multiplying 25% of all retail sales by the local sales tax — 6% in counties outside of Philadelphia (where it’s 8%) and Allegheny County (where it’s 7%).
The new use tax is therefore 1.5%, 1.75%, or 2%. This may not seem like much, but for breweries that operate on a slim margin and rely on beer sales as most of its revenue, the implications can be dramatic.
Philadelphians pay an additional 10% tax per alcoholic drink.