Nebraska Governor Proposes Plan to Implement 287% Tax Increase on Distilled Spirits, Harming Consumers and Local Businesses

[Erik Owens]

Move would result in 1,350 lost jobs, make Nebraska the second-highest tax rate for spirits among licensed states and reduce retail sales by $110 million

Source: DISCUS

July 24, 2024

Ahead of the expected special legislative session, Nebraska Governor Jim Pillen released his property tax plan that would increase the current excise tax rate for distilled spirits by 287% from $3.75/gallon to $14.50/gallon.

According to analysis by the Distilled Spirits Council, if this tax increase is passed, around 1,350 Nebraskans are projected to lose their jobs because of a more than $110 million decline in retail alcohol sales. Additionally, the new rate would establish Nebraska as the second-highest spirits tax rate in the country among licensed states. 

“Increasing taxes by more than 280% on spirits consumers and an industry not fully recovered from the devastating impacts of the pandemic is completely misguided,” said Adam Smith, Distilled Spirits Council of the United States Vice President of State Government Relations. “These taxes will be passed on to consumers in the form of higher prices. Higher prices will lead to a loss in sales, and a loss in sales will lead businesses to cut employment.”

The proposal would nearly quadruple beverage alcohol taxes in Nebraska, even though distilled spirits are already highly taxed in the state. For a typical bottle of distilled spirits purchased in Nebraska, more than 44% of the retail cost already goes to pay a tax or fee of some kind.

“This massive tax increase would have a chilling effect on the spirits industry that would ultimately have far reaching implications for others including local farmers, manufacturers and hospitality businesses,” said Smith. “The legislature should protect consumers and small businesses by rejecting this increase on alcohol taxes.