Michigan beer tax hike bill lands with sobering thud

Jonathan Oosting
Detroit News Lansing Bureau

Lansing — Michigan is “absolutely not” going to raise its beer tax nearly 250 percent, a state House leader said Thursday, offering a sobering prediction for new alcohol legislation designed to raise revenue for health and treatment programs.

State Rep. Tom Hooker, R-Byron Center, this week introduced a bill that would boost Michigan’s beer excise tax for the first time since 1966, upping the rate from $6.30 to $21.70 per barrel, or about 1.9 cents to 6.6 cents per 12-ounce can or bottle.

The tax would then be tied to inflation, meaning it could rise in future years without legislative approval.

“It’s a user tax,” said Hooker, a third-term legislator who hopes his bill will spark a conversation about an issue to which he has personal connections. His mother spent several years in an orphanage because her parents had problems with alcohol, Hooker said, and he’s personally never touched the stuff.

“If you’re going to use it, the problems that you cause are going to be paid for, and the same with the producers,” he said. “They’re producing a poison that’s causing problems to our systems, to our society, and they should have to pay for it.”

Business groups were quick to condemn the proposal, with the Michigan Chamber of Commerce calling Hooker’s proposal “a bad idea from a lame duck lawmaker” that would put local craft brewers, distributors and retailers at a competitive disadvantage with businesses in neighboring states.

“We’ve got the bottle deposit that already makes it hard for our border counties to sell these products,” said chamber lobbyist Tricia Kinley, referencing the state’s 10-cent deposit law.

The proposed beer tax increase would generate an estimated $60 million a year, according to the Michigan Alcohol Policy Promoting Health and Safety organization, which is backing the bill.

A majority of the new revenue would go to an office of substance use disorder treatment and rehabilitation services within the state Department of Health and Human Services. It would also help fund programs to prevent fetal alcohol spectrum disorders, early childhood education and prevention, sobriety courts and more.

Hooker’s tax bill is unlikely to pass the Republican-led House, said House Appropriations Chairman Al Pscholka of Stevensville.

“He doesn’t like alcohol so he wants to raise taxes on everybody else,” Pscholka said in a Thursday radio interview on “Michigan’s Big Show” in Lansing. “Not going to happen.”

The legislation was introduced without co-sponsors and referred to the House Regulatory Reform Committee, which is “booked pretty solid right now” and is unlikely to have a hearing on it before year’s end, said Chairman Ray Franz.

“Rep. Hooker has the very best of intentions, but I really don’t think there’s going to be time,” said Franz, R-Onekama.

Michigan’s beer excise tax, which amounts to roughly 20 cents per gallon, is the second highest among Great Lakes states, trailing only Illinois at 23 cents, according to The Tax Foundation. Hooker’s proposal would raise the rate to roughly 70 cents per gallon, which would make it the eighth highest in the country.

As an example of the bill’s possible effects, Kinley noted that some Michigan State University football fans will be traveling to Indiana for this weekend’s game against Notre Dame.

“Those folks are going to start buying their beer in Indiana, make no mistake about it, and the people that get harmed are those selling here in Michigan,” she said.

The craft beer industry has boomed in Michigan in recent years and is becoming a significant economic driver for the state, according to the chamber.

But Hooker said he is uncomfortable with that growth and has consistently opposed alcohol-industry-friendly legislation.

“Grand Rapids used to be the Furniture City, and then it was called Little Jerusalem, the city of churches, and now it’s the Beer City. I struggle with that,” Hooker said, referencing the West Michigan home of Founder Brewing Co. and others.

“I struggle with expansion of alcohol and recognize that it does damage our families and does damage our systems. Not everyone who drinks is going to be an abuser, but those costs have to be borne somewhere. Why should every citizen have to pay for it?”

Mike Tobias, executive director of the Michigan Alcohol Policy Promoting Health and Safety, applauded Hooker for introducing the bill despite the expected opposition, noting he has traditionally opposed tax increases.

“We think it would save lives and reduce alcohol and other drug-related harm,” Tobias said. “That’s why we’re doing it.”