Brief History of Beer Taxes and Their Effect

Like it or not taxes are a part of all of our lives. Wherever you find enterprising individuals you can be a taxman will be right behind him. An industry that makes a product as popular as beer will be subject to a variety of taxes and duties. As long as there has been beer there have been governments trying to tax it. And brewers have come up with some very creative ways to try and avoid them. Which had even lead to some new styles of beer.

For some recent happening in the beer, taxation world check our Beer Tax Scandal – Carling Beer Controversy

The beginning of beer taxation

A row of mugs with beer and a yellow sign warning ot tax ahead.
Credit: https://www.breweriesinpa.com/exclusive-pennsylvania-beer-tax-decision-favors-breweries/

The Ancient Egyptians were the first to tax beer. they had a simple tax per jug of beer sold system. However, sales taxes back then were easy to avoid. So when brewing made its way to Europe those creative European taxmen invented some interesting new ways to enforce taxes.

In France, some city councils mandated that brewers who didn’t pay their taxes were to have their right hands cut off. In Germany, taverns that didn’t pay up were torn down. This policy was taken to an extreme in Hamburg wherein 1550 there were more than 1 500 brewers but after 50 years of exorbitant taxes on beer, only 120 remained by 1600.

Beer taxes weren’t always taken well by the people. In fact, after the American Revolution, the new government decided that it would not levy any taxes on beer. As the old duties, the British levied on the States were seen as one of the major causes of the rebellion.

Taxes made brewers more creative

A glass of Guinness stout beer on a wooden table.
Credit: https://www.eatthis.com/guinness-beer-facts/

Irish stout was born not through the results of new technology or new markets being open but rather as a tax dodge. Arthur Guinness II. developed his famous recipe using non-taxed unmalted roasted barley in place of black malts in his porters to reduce the costs. The bitterness of the roasted barley set his brews apart from the competition in England and Scotland. And that combined with a lower price allowed Guinness to become a major brewing force in the British Isles and their colonies.

Taxes are also responsible for a historic drop in the gravities of British beers. Once brewers found a consistent way to measure the gravities of their beers the governments had a creative idea taxing beers solely based on the original gravity of the wort. After the Free Mash Tun Act in 1882, British brewers began creating beers with lower original gravities. Meaning that many British beers became dryer and used fewer hops.

Taxes on individual ingredients also continue to affect beer styles to this day. Was has often been an excuse to raise taxes. And beer is not immune to such inclinations. The first beer tax in the US was actually imposed by Abraham Lincoln to help pay for the Civil War. This Federal excise tax has been in place ever since and was dramatically increased during the Korean war in order to fund that conflict.

Although taxation can sometimes throw the industry into chaos it has also inadvertently created several beer styles we enjoy until today.

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