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Colorado beer taxes among lowest in the country

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Chris Woodward

(The Center Square) – Colorado has among the lowest beer taxes in the country, according to a recent report.

Colorado's 8-cent per gallon beer tax ranks the state 46th, a ranking by the Tax Foundation found.

“The United States collects an excise tax on beer at the federal level (ranging from $0.11 to $0.58 per gallon based on production, location, and quantity), but all 50 states and the District of Columbia also collect their own taxes on fermented malt beverages,” the Washington, D.C.-based think tank said. “While general sales taxes are tacked on after the price of goods is subtotaled, most states go straight to the retailer for beer excise taxes, collecting according to the quantity of beer sold (usually expressed as a rate of dollars per gallon).”

While not reflected on a sales receipt, Policy Analyst Janelle Fritts pointed out that “vendors pass along those costs to consumers in the form of higher prices.”

Colorado is home to 428 craft breweries, the fifth most in the country, according to the Brewers Association. Nearly 950,000 barrels of craft beer are produced in the state annually.

Adam Hoffer, the Tax Foundation's director of excise tax policy, told The Center Square that Colorado's low tax rate is good for both beer drinkers and producers.

"Colorado’s tax rate makes the state a relatively attractive place for beer consumers and producers, likely contributing to the significant growth of the craft brewing industry in the state," Hoffer said. "Colorado also has a competitive beer tax rate for the region, likely helping the state attract consumers from neighboring Utah and New Mexico. To the state’s north, Wyoming has the lowest beer tax rate in the country."

Wyoming's beer tax is 2 cents, followed by Missouri (6 cents), Wisconsin (6 cents), and Pennsylvania (8 cents), according to the Tax Foundation.