Leg. considering bills to lower taxes on spirits-based canned cocktails

Jan 14, 2023, 9:36 AM

canned cocktail...

Close-up of discounted cans and cases of packaged cocktails on Safeway store shelves December 31, 2020. (Photo by Smith Collection/Gado/Getty Images)

(Photo by Smith Collection/Gado/Getty Images)

If you’ve been to a summer barbecue in the last few years, chances are, there were canned cocktails there.

Seltzer drinks such as White Claw, Truly, Mike’s Hard Lemonade and others are a popular alternative to traditional cocktails because they tend to have a lower alcohol content and fewer calories.

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“These are low-proof, ready-to-drink beverages that come in a can. They’re typically a lower alcohol content — typically below 7%,” said Aaron Pickus, a spokesperson for the Association of Washington Spirits and Wine Distributors.

However, even if the different brands of canned cocktails all have a similarly low alcohol content, they are not all taxed the same. If you are drinking a canned cocktail made with hard liquor, you are going to pay much higher taxes than if that drink was a beer or wine seltzer.

“They look the same, they are a similar experience — people want a lower-ABV (alcohol by volume), lower-calorie-type product,” Pickus said. “But some of them are taxed a lot higher … Depending on your preference as a consumer — if you prefer a beer-based drink, a wine-based drink, or a spirits-based drink — you’re going to be taxed significantly differently.”

Pickus said that spirits-based canned cocktails are taxed approximately 100 times higher than beer-based ones, and more than 20 times higher than those that are wine-based.

“The tax rate on a spirits-based drink in Washington is $24 a gallon,” Pickus said. “For a beer- or malt-based beverage, it’s only 26 cents a gallon.”

For a wine-based drink, you will pay 86 cents per gallon.

That is why Pickus, along with a group of residents and business owners, has worked with legislators to write a bill to bring down the taxes on spirits-based canned cocktails.

House Bill 1344 and its companion bill, Senate Bill 5375 — both of which are bipartisan — would lower the tax on canned cocktails made with hard liquor to $2.50 per gallon, about 10 times higher than the tax on beer seltzers.

“We’re not looking to make it the same, but just to close the gap,” Pickus said.

This would apply to canned cocktails that are 7% alcohol or lower.

Other states like Idaho have already rewritten the liquor laws in a similar manner.

The reason for the difference in taxation between beer, wine, and liquor seltzers is simple — a bottle of liquor is taxed at a higher rate in Washington than a bottle of wine or beer, because its alcohol content is higher.

However, this tax structure stays in place for canned cocktails, even if the alcohol content in a vodka-based canned cocktail is the same or less than that of a wine seltzer.

Pickus believes it simply has to do with the laws being written before the seltzer craze.

“What we’ve seen is that there is, in recent years, this new type of product that is of a lower alcohol content,” Pickus said. “And this wasn’t necessarily anticipated when the tax code was being set up.”

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Leg. considering bills to lower taxes on spirits-based canned cocktails