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.
Would Make Nebraska 2nd-Highest Spirits Tax Rate in U.S.
According to analysis by the Distilled Spirits Council of the United States – DISCUS, 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 (DISCUS) 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.”
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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.
DISCUS launched a state-wide campaign through Spirits United encouraging consumers to reach out to their legislators to stop the tax increase. Nebraska consumers can take action here.
New Revenue Sources to Fund Property Tax Relief
In 2023, the State collected over $3.6 billion in individual and corporate income taxes, $2.3 billion in sales and use taxes, and $5.3 billion in property taxes. To belter balance Nebraska’s three-legged tax stool, we must end special interest tax breaks and loopholes. This plan eliminates 114 tax exemptions, thus, bringing them on the tax rolls. This is good tax policy. It is fair to middle-class Nebraskans, and it will produce $950 million in property tax relief.
The remaining amount will be covered by increasing sin taxes on cigarettes, candy, pop, vaping, spirits, keno gambling, games of skill, and consumable hemp. This will generate over $200 million in property tax revenue when fully implemented. Compared to other states, Nebraska is behind in deciding to assess an appropriate tax on these items. This plan doesn’t even cause Nebraska to rise to the top of state rankings for these items, but it will finally make us competitive.
Nebraska Distilled Spirits Facts & Figures
- Allowing Distilled Spirits Tastings at Retail Location: Yes (on-premise)
- Allowing Sunday Sales of Distilled Spirits: Yes – allows local government option throughout the state
- Allowing On-Premise Retailers (Restaurants/Bars) to Sell Cocktails To-Go: Yes – Permanent Law
- Allowing Wine Direct-to-Consumer Shipping: Yes
- Allowing Spirits Direct-to-Consumer Shipping: Yes – permanent
- Spirits Supported Jobs: 9,900
- Spirits State Economic Activity: $1,068,700,000
- State Export Data: $85,266
The Distilled Spirits Council of the United States is the leading voice and advocate for distilled spirits in the U.S., advocating on legislative, regulatory and public affairs issues impacting the distilled spirits sector at the local, state, federal and international levels. DISCUS members are committed to responsibility and encourage adults who drink to do so in moderation.
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