Kane's Beverage News Daily

It doesn’t seem fair.  Spirits-based ready-to-drink products are taxed in New Jersey at a rate 46 times that of malt-based RTDs.  Yesterday (6/17), the New Jersey Senate Budget & Appropriatons Committee overwhelmingly passed SB 3452, legislation to equalize the tax rate for spirits-based and malt-/beer-based ready-to-drink (RTD) products with similar alcohol by volume (ABV) up to 9.9% ABV.

Jay Hibbard, senior vp-state government relations at the Distilled Spirits Council of the U.S., and John Granata, co-founder of Jersey Spirits Distilling Co. and president of the New Jersey Craft Distillers Guild, submitted testimony in favor of the bill.

Hibbard’s testimony highlights an economic analysis conducted by DISCUS which indicates the New Jersey Treasury would realize more than $34 million in new tax revenue from the RTD category within three years based on the new excise tax rate and New Jersey’s current sales tax rate.

“New Jersey is one of many states working to ensure RTD products are being taxed fairly to support consumers and small businesses in their marketplace,” Hibbard said. “To do so, these states are taking a closer look at the issues that prevent consumers from having equal access to spirits-based RTD products. New Jersey is also not the only state in which the beer industry has decried this type of consumer-friendly legislation and leveled myth-based criticisms at the spirits industry. There is no scientific, public safety or public policy basis to treat distilled spirits products differently than beer and wine – especially when the products, such as RTDs, have the exact same alcohol by volume.”

It also notes equalizing the tax would increase jobs in New Jersey’s spirits industry, which supports more than 55,000 New Jersey jobs and $1.5 billion in wages.

Granata’s testimony highlighted the negative impacts his business faces by having his products taxed nearly 46 times that of his beer counterparts in the state.

“Allowing distillers to have parity in this space would enable growth and expansion and would create more tax dollars through equipment investments, the purchase of raw materials and the hiring of new employees,” said Granata. “The canned RTD market is pretty new, and we should all have the opportunity to produce like products at like tax rates, and customers deserve to make choices of their own. We urge you to look at the facts rather than the rhetoric and allow us to compete on an even playing field with all our alcohol industry members. We want parity, not protectionism. Customers deserve to make choices of their own.”