The repeal of Prohibition brought in much-needed tax revenue.
It’s tax day! So whether you will be celebrating or recovering from shock, raise a glass to getting it done. As is common with most valued products, beer and taxes have been intertwined for centuries. The first known beer tax was laid down by the rulers of ancient Egypt, who also accepted payment for the tax in beer. For years, churches accepted—or even required—a payment of beer, and 16th century German brewers in Hamburg were taxed so heavily that their numbers dropped from more than 1500 to 120 by the end of the century.
Paying for the war with beer and pianos
Beer escaped taxation in the U.S. until 1862, when Abraham Lincoln passed the Revenue Act to help pay for the Civil War. The bill called for a $1 per barrel tax on beer, as well as other “sinful or luxury” goods like playing cards, feathers, gunpowder and pianos. That tax has increased to between $7 and $18, depending upon the size of the brewery (but could soon be reduced for small breweries if the Small BREW Act passes). Today, about 40% of the cost of a bottle of beer, including brewing and distribution, is due to taxes.
But if we look past the mercenary aspect of it, taxation has contributed to beer’s evolution in many pleasant ways. The development of IPAs, deep black porters, and clear, light beers can all be traced to the effects of taxation—or lack of it.
If not for taxation, we could be bittering our beer with henbane.
Hops
For most of brewing history, beer was bittered with a mixture of herbs collectively called gruit. Hops had spread to Germany and Britain by the 1500s, but gruit was still a common ingredient as well. However, the German Beer Purity Law (Reinheitsgebot) passed in the early 1500s stipulated the lawful beer ingredients as water, barley and hops, making gruit illegal to use.
Then, in 1710, the English Parliament began taxing hops and banned the use of any non-hop bittering agents. The brewers of Northern Europe were seen a masters of the craft at the time, and so with the loss of gruit-brewing in England as well as Germany, the influence of hops as an ingredient spread.
Black Patent Malts
By the late 1700s, brewers also had access to the technology to determine that the brown malts used in porters were not as efficient as pale malts. They began brewing with pale malts instead, but the porter-loving drinkers did not like the new, pale color of their beer. In response, many brewers darkened their brews with burnt sugar.
However, sugar was not taxable at the time, and so again the British government stepped in and decreed that only water, hops and malt could be used in beer. This led Daniel Wheeler to invent a malt roaster able to turn malts a deep black that would add color to the beer without much alteration of taste. These Black Patent Malts are still classically used in today’s porters.
Clear and Clean
Ceramic mugs hid the beer from view.
The evolution of beer has also been influence by the reduction or removal of taxes, sometimes in rather indirect ways. Another late 1700s tax-based change came when the British Government abolished the Glass Excise—a tax placed on glass that had made it an expensive material to work with. Coupled with recent innovations in glass manufacturing, this repeal encouraged the production of clear glass drinking vessels and bottles. Now consumers could see the beer they were drinking, and clear, clean beers became more popular.
Still feeling taxed?
For better or worse, legislation and taxation can have a significant impact on breweries—from opening new markets to stilting creativity. If you want to help make a difference in your area, and foster more creative brewers, stay informed and get involved! Nobody does it better than the Brewer’s Association.
