Daniel Olson and Josh McDonald: Liquor tax study a waste of money

By Daniel Olson and Josh McDonald

In Washington – as in most states – liquor is taxed at a higher rate than beer and wine. But some big businesses from outside of Washington want to change that.

Global behemoths in the hard liquor industry, such as some of the world’s largest spirits producers Diageo and Pernod Ricard, as well as the biggest spirits distributors in our country, Southern Glazer’s and RNDC, are pushing Senate Bill 5368 to study Washington’s alcohol taxes. This study is designed to persuade lawmakers to give their businesses a massive tax break next session at the expense of our homegrown brewers, winemakers and local agricultural partners. This would be a huge tax break to foreign corporations, devastating to Washington’s economy.

Because they couldn’t convince lawmakers to consider a 1,000% tax increase on Washington’s brewers last year to offset revenue lost from a tax break for international liquor companies (currently at $35 per gallon), their lobbyists pivoted to a “study” bill as a gateway to achieve their end policy goal of lower hard liquor taxes.

Washington lawmakers are billions of dollars short this budget cycle and are looking at possible cuts to vital programs like education, health care and social services. We should not waste hard earned taxpayer dollars to conduct a study that simply isn’t needed.

Washington’s alcohol tax system is appropriately set by product type and consistent with the federal system as well as those of other states. In fact, considering Washington’s beer and wine industries are large economic drivers for our state, our beer and wine taxes are already much higher than comparable states like California and Oregon. This fact makes it so our local breweries and wineries are already at a disadvantage with the states we compete with most for market share.

According to the Tax Foundation, Washington ranks 25th ($0.26 per gallon) among the 50 states in beer tax rates and similarly 25th ($0.87 per gallon) in wine tax rates – this is the middle of the road and an argument could be made that they should be lower because of how much these two sectors fuel our local economy. For comparison, Oregon, another beer producing mecca and hop growing state like ours, is 45th in beer taxes. California, the largest wine producer in America (Washington is second) has one of the lowest wine tax rates in the country. That’s because these states realize you don’t tax your local industries to death. Instead, you support them through sound policy that creates economic development and more good-paying jobs.

Washington’s more than 400 breweries support 60,000 jobs, $3.5 billion in wages and $11 billion in economic activity annually for the state, according to Beer Serves America. Our more than 1,050 wineries create more than 61,000 jobs, $2.8 billion in wages and $9.5 billion in economic impact annually according to Wine America. And because Washington is the largest hop growing state in the U.S. – nearly 50% of the entire world’s supply – and the second largest wine grape growing state, these are local jobs and businesses supporting other local jobs and businesses.

Sadly, the past two years have been incredibly difficult for beer and wine. In 2024, beer sales were down 2% and down 1% in 2023, with more breweries closing in those two years than new ones opening. This has resulted in Washington hop growers planting 15% less last year. Wine sales have also slowed and according to WineBusiness Analytics, Washington lost 2% of its wineries last year. Yet, hard liquor, especially canned cocktails, have continued to grow post-pandemic.

Between inflation, supply chain issues, employee shortages, wildfires and fewer people drinking or switching to ready-to-drink cocktails, our local brewers and winemakers need the support of lawmakers to survive. The last thing we need are tax increases and even more competition with international hard liquor companies that don’t support the local economy the same way beer and wine do.

Washington’s beer, wine, hops and grapes aren’t just a part of our heritage and culture, they are a vital part of our economy and identity. We must protect these industries and not cave to the pressures of hard liquor lobbyists.

Daniel Olson is executive director of the Washington Brewers Guild, which supports, unites and protects Washington craft brewers through legislative advocacy, education and brewer community building. Josh McDonald is the executive director of the Washington Wine Institute, which is the vocal, active, visible advocate and champion of the Washington State wine industry in Olympia and Washington D.C.