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Administration may exclude beer from "sin tax" package.

According to reports in the Wall Street Journal, the Clinton Administration is leaning toward exempting beer from the "sin tax" package it will propose to help pay for its health care package.

Administration officials say they haven't decided whether to raise taxes on any alcoholic beverages. But if they do, officials said, beer is likely to be excluded because the public considers it a drink of the working class. Boosting the beer tax is "more likely to alienate people" than to raise significant amounts of money or to reduce alcohol consumption, said one administration official.

The administration has been weighing a number of tax increases on products considered health hazards to raise money for its plan to extend health coverage to all Americans. A tax increase on cigarettes seems certain, but the amount hasn't been decided.

In addition, the administration has been considering raising the excise tax on guns and ammunition, at the risk of mobilizing the powerful gun lobby.

The beer issue, however, is considered "tricky" by the administration.

During the presidential campaign, candidates Clinton and Bush attacked each other in commercials for "raising taxes on the middle class" by boosting beer taxes. Bush signed a bill doubling the federal excise tax on beer to 33 cents a six-pack as part of the 1990 deficit reduction package. And Clinton had raised the Arkansas alcohol levy during his time as governor.

Another hurdle to raising the beer tax is opposition from House Majority leader Richard Gephardt, who represents St. Louis, home of Anheuser-Busch. The powerful brewer recently announced that another tax increase might force the closure of its flagship St. Louis brewery.

Although Gephardt had supported the excise tax increase of 1990, he is said to believe that another increase "would be damaging to the industry."

Brewers are working to represent the brewing industry as a provider of refreshment for people who are "salt of the earth," as an A-B briefing paper puts it.

"Higher taxes on beer mean higher taxes on men and women who are working hard to build their careers, their families and their financial futures," according to the paper, which is titled "Taxing Joe and Jane Six-Pack: Now more than ever an unfair approach."

The paper asserts that there are more than 80 million beer drinkers in the U.S., with 30 million consuming more than one six-pack each week.

Analysts noted that if beer is the only alcoholic beverage that isn't slapped with higher excise taxes, distillers and vintners will be displeased.

Although the alcohol beverage industries are currently united in their opposition to tax increases on any of their products, an exemption for beer would splinter the ranks.
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Publication:Modern Brewery Age
Date:May 17, 1993
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