Senate Panel Approves Sweeney Measure to Reduce Tax Rate on Ready-To-Drink Beverages

TRENTON – In an effort to ensure a fair regulatory environment for ready-to-drink (RTD) beverages that have alcohol content similar to beer, the Senate Budget and Appropriations Committee today approved a bill sponsored by Senate President Steve Sweeney that would reduce the excise tax rate for RTD products to match the current tax rate for beer.

Under the measure, S-3452, spirits-based ready-to-drink products with 9.9% alcohol by volume (ABV) or lower would be taxed at $0.12 per gallon, the current rate for beer, which has roughly the same alcohol content. RTD products are currently taxed at $5.50 a gallon, the rate applied to liquor products with much higher alcohol content. Under the measure, the rate for hard cider, currently $0.15 per gallon, would also be lowered to $0.12 per gallon.

“This legislation is about tax-fairness and consumer choice,” said Senator Sweeney (D-Gloucester/Salem/Cumberland). “Until now, beer was the drink with moderate alcohol content. Today there are new products for consumers with moderate alcohol content. The ready-to-drink industry is the future, and we’re seeing local distilleries in New Jersey entering the market. It is crucial that we as a state support that growth, and support the desire of consumers, by ensuring that the regulatory environment is appropriate and fair. This measure accomplishes that.”

The lack of equity in the current tax structure is demonstrated by the fact that the price of an average case of beer currently includes roughly $0.14 of excise tax, while the price of a case of spirits-based RTD products with similar alcohol content includes roughly $6.19 of excise tax.

The Distilled Spirits Council of the U.S. projects that New Jersey would realize more than $34 million in new tax revenue from this category within three years of implementation of the new excise tax rate. The group also projects that the revised rate would increase jobs in New Jersey’s spirits industry, which currently supports more than 55,000 New Jersey jobs and $1.5 billion in wages.