Pennsylvania lowers sales tax on taproom craft beers, pushes start to Oct. 1 | TribLIVE.com
Westmoreland

Pennsylvania lowers sales tax on taproom craft beers, pushes start to Oct. 1

Renatta Signorini
1335824_web1_gtr-brewerytax4-070119
Michael DiVittorio | Tribune-Review
The Leaning Cask Brewery Co. in Springdale has to cope with sales tax being charged on drafts at its taproom.
1335824_web1_gtr-brewerytax001-070119
Dan Speicher | Tribune-Review
Assistant brewer Adam Selvaggio adds oats to the mash during brew day at Yellow Bridge Brewing in Delmont, on Tuesday, June 25, 2019.
1335824_web1_gtr-brewerytax003-070119
Dan Speicher | Tribune-Review
Assistant brewer Adam Selvaggio prepares to transfer the mash to the boiling kettle during brew day at Yellow Bridge Brewing in Delmont, on Tuesday, June 25, 2019.
1335824_web1_gtr-brewerytax002-070119
Dan Speicher | Tribune-Review
Brewers Adam Selvaggio and head brewer Trevor Staab check the mash tun during brew day at Yellow Bridge Brewing in Delmont, on Tuesday, June 25, 2019.
1335824_web1_gtr-brewerytax5-070119
Michael DiVittorio | Tribune-Review
The Leaning Cask Brewery Co. in Springdale has to cope with sales tax being charged on drafts at its taproom.
1335824_web1_PTR-ENIX-4-101918
ENIX Brewing
ENIX Brewing in Homestead makes its own beer in house. Selections change seasonally.
1335824_web1_GTR-BloomBrew-01-062719
Krystal Johnson, of Elizabeth, enjoys one of Bloom Brew’s Peach Buzz beers, a peach wheat beer, while chatting with her mother, Sandy Petro, left, on Wednesday night, June 26, 2019 at Bloom Brew in West Newton.

Some craft beer brewers will adjust prices.

Others are considering options to offset any additional cost associated with a state requirement that they must collect sales tax starting Oct. 1 — after a July 1 start date was delayed — on beers sold at their taprooms and to-go purchases.

John Lasher at Cellar Works Brewing in Buffalo Township is planning to add a note on the bottom of receipts letting customers know where the extra money they’re being charged is going.

But brewers all hope the change doesn’t hurt business.

“I’m hoping not, but that’ll tell in time,” said Mark Pavlik, owner of Four Seasons Brewing Co. & Pub in Latrobe. “Do I raise my prices to counteract the sales tax, or is that just a cost that I have to eat?”

There is one silver lining: Craft breweries won’t have to charge as much as initially thought.

State legislators and Gov. Tom Wolf on Friday approved a bill that would update the tax code and adjust how much sales tax craft brewers have to pay on each beer sold — 6% sales tax on 25% of the retail value. The legislation was drafted by state Rep. Natalie Mihalek, R-Allegheny/Washington, with the help of trade group Brewers of Pennsylvania, in response to a sales tax bulletin issued last year by the state Department of Revenue.

Craft brewers have been waiting for months to see what would happen with the legislation. A July 2018 bulletin issued by the Department of Revenue reminded craft brewers they are required to collect a 6% sales tax on beers. That bulletin has been rescinded.

The department is expected to issue further guidance to brewers in the future.

“We recognized the changes made to the law in recent years as part of liquor reform created confusion and some lingering issues for both consumers and the beer industry,” department spokesman Jeffrey Johnson said. “That’s why we were willing to sit down with legislators and members of the industry to hear their concerns and work toward an equitable solution, which is what this legislation provides.”

At an April public hearing in Pittsburgh, brewers expressed confusion and fear about the prospect of collecting 6% sales tax. Brewery owners believe the tax should be applied at the wholesale level in the same manner it is collected from distributors and retailers.

Greg Kamerdze is considering options ranging from changing prices to changing production levels at his small brewery in Spring Hill on Pittsburgh’s North Side.

“It’s been kind of hard to wrap my head around,” he said.

On a $6 beer, 6% sales tax would have been 36 cents.

Under the new legislation, 6% sales tax would be applied on 25% of the $6 beer, meaning the sales tax would be 9 cents.

Ian Staab, owner and founder of Yellow Bridge Brewing Co. in Delmont, said he was planning to adjust serving sizes of some types of beers anyway, so any sales tax requirement could be worked into new prices.

“As long as the extra amount we’re charging per pint doesn’t affect our foot traffic, which I don’t think it will,” then business should be OK, Staab said.

The tax may result in drinkers spending less, but it’s hard to predict how business might be affected, Lasher said.

“I think that charging a per-pint tax is ludicrous,” he said.

Staab collects about $12 in sales tax on a half-barrel keg — which holds 124 pints — of his beer. He would have charged about $44 in 6% sales tax in his tap room on each of those 124 pints under the Department of Revenue’s initial requirement.

Under the new rules, it would be about $11 total in sales tax on those pints, nearly equal to the total he charges distributors on the half-barrel keg.

State officials expect to bring in about $1 million in sales tax during the 2019-20 fiscal year under the new legislation, according to a House Committee on Appropriations fiscal note.

The reduction called for in the bill from craft breweries that already pay 6% sales tax would be offset by the increased income from craft breweries that currently aren’t in compliance.

Brewers expressed confusion throughout the process, citing a lack of communication from the Department of Revenue that left them with questions. State and local organizations were helpful in educating brewers about the potential impact on a product for which they already pay excise taxes, they said.

“At the end of the day,” Pavlik said, “it’s unfair to the customer.”

Renatta Signorini is a Tribune-Review staff writer. You can contact Renatta at 724-837-5374, [email protected] or via Twitter .

Categories: Local | Regional | Westmoreland
TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.