Lawmakers consider dropping sales tax on beer

(AP Photo/Robert F. Bukaty, File)

PROVIDENCE, R.I. (WPRI) — Rhode Island brewers say a proposal to repeal the sales tax on beer would help grow their businesses and put them on even footing with wine sellers and with Massachusetts.

New Shoreham Republican Rep. Blake Filippi introduced the bill, which received a hearing in the House Finance Committee Wednesday night. The bill would repeal the 7% sales tax currently levied on retail beer and malt beverage sales.

Wine and spirits are already exempt from the sales tax in Rhode Island, and all alcoholic beverages are exempt from the sales tax in Massachusetts.

“Our legislation is in the best interest of Rhode Island merchants – who are losing business to customers who don’t mind traveling a few miles across the border to save money,” Rep. Filippi said.

Consumers bought $141 million worth of beer and malt beverages in Rhode Island in 2016, according to the annual tax administrator’s report. It amounts to nearly $10 million in sales tax revenue.

Rep. Filippi said he expects the excise tax on beer paid by wholesalers and distributors to make up the lost revenue, assuming sales of beer in Rhode Island increases as a result of the sales tax repeal. He said the state had a 15.2% increase in the excise tax on wine and spirits after eliminating the sales tax on those beverages.

Nick Garrison, the founder of Pawtucket-based Foolproof Brewing Company, said customers are crossing the border to buy tax-free beer in Massachusetts.

“We want to have the same tax rates here in Rhode Island, otherwise we’re going to lose business to our neighbors,” he said in an interview with Eyewitness News.

“This is a growth industry for Rhode Island,” Garrison said. “Removing that tax is really going to help our business grow, it’s going to allow us to brew more beer, sell more beer and hire more people.”

Mark Hellendrung, the president of Narragansett Beer, also said he was supportive of the legislation, which he said would put beer companies on even ground with wine sellers.