Wednesday, May 2, 2012

Have New York craft brewers (and drinkers) been 'shelted'?

"Shelted" is a word Canadian blogger Alan "A Good Beer Blog" McLeod made up three years ago, and from the context, I'm guessing it means "being asked to pay a premium price for a beer imported by Shelton Brothers." (Alan's a bit obsessive on price/value in beer, and the Shelton line is not noted for being underpriced. Update: turns out it's quite a bit more than that, if you'd like to have a look, and thanks to Alan for explaining. ) Or maybe something similar, but vaguely more crude; you can do the interpretation. Anyway, Alan tweeted this today:
"Once or twice I have used the word "shelted." All of New York may now know the feeling." 

The link goes to a New York Post story about a new interpretation on New York taxes and fees that were no longer being applied to small in-state brewers, thanks to the outcome of a lawsuit brought by Shelton Brothers, whose beers were liable for the taxes and fees. Quoting from Russia Today (sorry, RT.com...), here's the story in more detail than the Post explained:
Until recently, the first 200,000 barrels of beer produced by a company within New York were exempt from taxes that were imposed on other ale importers. Starting immediately, however, those small-time brewers who only produce a limited number of delicious nectar each year will be taxed on each and every barrel — to the tune of $4.34 apiece.Additionally, brewers in New York that produce fewer than 1,500 barrels will now be forced to pay a $150 label registration fee. 
First, label registration fees are bullshit, and shouldn't even exist; if they do, there should be some kind of blanket fee for multiple labels. The state should be ashamed for charging these; they're like points on a mortgage; just a fee the state charges because it can.

But the taxes? $4.34 a barrel is 14 cents a gallon, hardly one of the big state excise taxes, but it amounts to a lot of money for a small brewer. A brewer making 5,000 barrels a year will pay an additional $21,700 to New York; a hefty, unplanned chunk. Apparently New York City imposes an additional 12 cents a gallon (shocker, right?), so you're getting into real money here.

But let's take it in a different direction. The Post asked around -- maybe, they're not clear about who they actually asked -- and got this: "It wasn’t clear how much more consumers will pay, but industry workers predicted that the cost of a local beer will rise at least $1 for every pint."

Really? If that's true, then the addition of  26 cents a gallon in tax, which means the brewer is paying an additional 3.25 cents a pint, is going to cost consumers eight friggin' dollars. Which, my friends, is yet another reason why excise taxes are stupid and regressive. You're getting hosed, the state's not even making that much money, and the three-tier system's raking it off. Hell, they're mad at Shelton Brothers? They ought to build them a statue.


But the main point here is this: should New York beer drinkers be pissed at Shelton Brothers for increasing the price of their beer? Or were the brothers Shelton simply getting justice after getting burned by paying taxes New York brewers didn't have to pay? I would say that this is a 21st Amendment issue. If New York wants to charge different taxes on alcohol producers in-state, well, the 21st Amendment gives them the right to do that. And if not, and that means New Yorkers have to pay too much for a glass of beer, they need to tell their legislature that the beer excise tax is too damned high.

But it's the court's fault, and ultimately the law's fault, not Shelton Brothers'. This is not a level playing field, and the laws make it that way. We win by fighting the laws, not each other. Until then, I can't fault a brewer or importer for trying to level things out through the courts.

6 comments:

Alan said...

Close but no cigar - not even a Philly Sweet: http://beerblog.genx40.com/archive/2012/may/tobesheltedis

Lew Bryson said...

Well...I don't think I'm THAT far off, given that I just wanted to be brief, but I will link to that in the post. And the part about "a bit obsessive on price/value in beer" was largely tongue in cheek...though you do talk about it more than anyone else I know. Thanks for following up.

Alan said...

Oh, I am obsessive. But it is a very good thing to be obsessive. That is my frigging money they have in their savings accounts!!!

But you did not, because you are nicer than me, appreciate the full arsehole rejection thing at play, too. I refuse to give money to arseholes... right up until the gueuze arrives. Then I can't believe myself. I can't believe what I turn into.

Aaron Bennett said...

I don't understand how 3.5 cents of taxes per pint adds up to $1 to the consumer. Where the those numbers coming from? That seems totally screwed up.

Alan said...

Wouldn't the precedent be the great hops scare of 2007 that saw prices rise beyond what they should have and the failure of prices to fall afterwards.

Russ said...

As a lawyer (and, like Alan and unlike Shelton, a practicing one), I think the courts made the right decision as it's a Commerce Clause issue, not a 21st Amendment issue. Yes, the 21st Amendment says the states can regulate alcohol, but the Commerce Clause says you can't pass laws that discriminate against out-of-state businesses unless you have a compelling reason to do so and there's no less-discriminatory way to achieve it. I'm guessing folks in Missouri and Wisconsin are glad of that fact (not that AB-InBev or MillerCoors would ever try to push through protectionist laws in said states... wink, wink, nudge, nudge). It sucks that in this situation it hurts local breweries and benefits a monopolistic out-of-state importer, but the law applies to all situations, not just those where it works in favor of the "good guys."