E-Malt.com News article: USA: Internet beer retailers in Vermont will be subject to sales tax collections

Starting on January 01 2007, the sale of beer in the state of Vermont will be subject to the state sales tax. This move is part of the Streamline Sales Tax project, an effort by 44 states to begin collecting sales tax from Internet retailers, the Bennington Banner published November 22. Heineken, Budweiser, Coors and Miller — all could soon cost 6 percent more.

"The idea is to get all retailers to pay sales tax," said Mark Perrault, an analyst with the Vermont's Joint Fiscal Office. "In order to do that, it's basically a nightmare for retailers, because every state defines their tax bases differently. So the project tries to create a uniform tax base."

"There was one category for beer and wine — we either had to tax both alcoholic beverages or none," Perrault added. "The Legislature had to decide, and they decided to tax both."

Perrault said that wine currently has a sales tax assessed on it by the state. There is an excise tax that is already collected on alcoholic beverages — beer is taxed at a rate of 26.5 cents per gallon, and wine is taxed at 55 cents a gallon.

State Senator Dick Sears, D-Bennington, said the Streamline movement was spurred by Internet sales growth.

"Internet sales have grown so much, that states are losing a lot of revenue," Sears said. "In order to meet the Streamline requirements, we had to tax this ... that's one of the downsides (of the program)."

The new tax will not affect beer sales in bars, which are taxed under a different category, nor will it affect hard alcohol.

Local beer sellers were unhappy with the tax, but did not seem to think it would affect sales too negatively.

"We were quite surprised — it was a hidden tax that got passed and nobody knew about it," said James Brown, manager of the Beverage Den. "I don't think the impact is going to be as much as (an increase in) the cigarette tax — that was more price-sensitive."

"Everyone's used to this by now, but not by choice," said Brown. "With the cost of living, everything goes up, everything goes up, everything goes up. I think most people will say, 'It's more money out of my pocket, but what can I do?'"

When asked what customer reaction might be, Brown said, "There's going to be a lot of grumbling."

Denis Noel, owner of the Bennington Beverage Outlet, agreed. "I think the impact will not be the same as with the cigarette tax — that was an issue of adding cost," Noel said. "I don't see people flying to other states like with cigarettes — that's my opinion."

"It might have a higher effect on high-end beers, though," Noel said.

Both Sears and State Rep. Bill Botzow, D-Pownal/Woodford, breached the possibility that the tax on beer be looked at in the next legislative session.

"I think we should look very carefully at it," Botzow said. "I'm not particularly keen on taxing beer."

"I've called and asked questions of the legislative counsel," Botzow added. "I've asked him, if we make changes, would we make changes to a specific item or to the whole (legislation)."


24 November, 2006