8/18/2019 Excise Tax Reforms

1/2

Excise Tax Reforms

An accepted key principle in good tax policy is that the objective of an indirect tax should be

neutrality, or the principle that the tax rate, tax base and tax structure should not impact

markedly on investment, production or consumption. It certainly should not be used to“target” or to “favor” one particular industry, one particular product, or one particular tax

 payer over another.

Tax policy can, hoever, in certain limited circumstances, include the need to levy “special”

or “discriminatory” taxes such as excise, in response to the externalities !or harm" associated

ith the consumption of certain goods and services. These types of goods and services that

e associate ith excise on these grounds are usually alcohol, tobacco, motor vehicles, and

gambling.

Therefore, the main objective of this chapter is to stress the benefits of moving toards

standardi#ed approaches to the ays in hich the region defines, classifies and treats “like”

 products as ell as standardi#ed approaches to the ay in hich they are taxed such as

applying and defining a tax base. The approaches outlined in this section are taken from

many sources and represent hat the study group considers as “best practice$” they should be

utili#ed by excise tax policymakers as a %starting point” as they consider future reforms of 

their national excise tax systems.

Mexico

As a conse&uence of the energy reform of '()*, pursuant to hich the price of automotive

fuels ill no longer be controlled by the government and companies ould be alloed to

obtain permits to sell such fuels in an open market and ith free determination of prices, the

existing excise tax regime applicable to automotive fuels ill be repealed and replaced by a

fixed+&uotas regime. A transitory regime for the determination of the excise tax onautomotive fuels ill be applicable during '() and '()-, and the ne regime based on fixed

&uotas ill be applicable as of '().

USA

/n average, more than *( percent of hat American beer drinkers pay for a beer goes toard

federal, state and local taxes0from excise to consumption to sales taxes, as ell as the

normal business taxes. That makes taxes the most expensive ingredient in beer today.

8/18/2019 Excise Tax Reforms

2/2

Additionally, the 1.2. beer industry contributes nearly 3'45 billion to our economy and

supports ).-4 million American jobs.

History of the Federal Excise Tax on Beer

6xisting federal excise taxes on beer are set at a rate of 3)7barrel for breers of more than '

million barrels !' million gallons, or the e&uivalent of ))( million six+packs" and all beer 

importers. 2ince the late )8-(s, groth in the small breing sector has been encouraged by

tax credits offered to breers hich produce less than ' million barrels, cutting their excise

tax rate to 3-7barrel on the first (,((( barrels and alloing them a far loer overall effective

tax rate on all barrels up to ' million.

Today there are more than 5,5(( breeries in the 1nited 2tates. 9ore than 8( percent of all

federally+permitted breers produce feer than -,)*5 barrels annually, meeting the definition

of a small breer set by the Alcohol and Tobacco Tax and Trade :ureau !TT:". 9any of 

those small breers are brepubs, hich are restaurants ith breing operations designed to

sell locally. As an industry, e;re proud to do our part in keeping America great. :ut the truth

is, e;re doing more than our fair share, shouldering a higher tax burden than just about every

other consumer product.