West Virginia among the top states for alchohol taxes
CHARLESTON, W.Va. -- When ordering your next drink at a restaurant or bar, you might want to think about the taxes you're paying.
A recent study ranks West Virginia as the 10th best state for alcohol taxes. The Mountain State also ranks higher than any of its neighboring states.
"Just knowing that changing the kind of drinks you are having. You can pay fewer taxes," said Alex McAdams, the author of the study released last month on the NerdWallet website.
The study looked at beer, wine and spirits in all 50 states, and compared those numbers with the total consumption of each beverage type in each state. Combining the two, the study generated a composite score for each state to rank them.
In West Virginia, the tax rate on beer is about half that of either wine or spirits, McAdams said. Beer is taxed at 1.7 cents per "standard drink," while wine is taxed at 3.9 cents per drink and spirits at 3.3 cents per drink. A standard drink is generally considered 12 ounces of beer that is 5 percent alcohol, 5 ounces of wine that is 12 percent alcohol, and 1.5 ounces of liquor at about 40 percent alcohol.
Ohio and West Virginia share the same beer tax rate, but Pennsylvania enjoys the lowest regional beer tax rate at 0.8 cents per drink. Virginia's rate is 2.4 cents per drink, Maryland's is 4.2 cents per drink, and Kentucky's is 7.1 cents per drink.
Ohio enjoys the lowest tax rate regionally for wine at 1.3 cents, compared to West Virginia's 3.9 cents per drink. Maryland is 5.4 cents, Virginia is 5.9 cents and Kentucky is 12.3 cents. All Pennsylvania wine sales are controlled by the state and have no direct tax rate, according to the study.
When it comes to hard liquor, West Virginia's spirits tax rate of 3.3 cents per drink is the lowest in the region, according to the study. Per-drink rates in surrounding states are Maryland, 5.2 cents; Kentucky, 8 cents; Pennsylvania, 8.5 cents; Ohio, 11.5 cents; and Virginia, 24.1 cents.
The study did not find a clear correlation between tax rates and traditional political leanings, McAdams said. Nor did researchers find that taxes were categorically more extensive in one region of the country than another, he said.
"I think if you look more carefully state-by-state, the alcohol tax rates do reveal a lot about the individual state's attitudes and policies toward alcohol more generally," McAdams said.
For example, he said, Washington state ranks last for the best alcohol taxes -- but if you look at the beverage industries that operate on a wide scale there, there's more to see.
Washington has a lot of wineries and microbrewers, so those tax rates are fairly average: beer at 7.1 cents per drink, wine at 3.4 cents per drink.
Spirits, on the other hand, are taxed at 41.3 cents per drink in Washington.
"As you might imagine, the state has a vested interest in protecting those particular [beer and wine] industries," McAdams said. "So they will often have lower taxes."
Conversely, Missouri was ranked as the second best state for alcohol taxes, and McAdams said the state has a long history of leniency toward alcohol. The state does not have a statewide ban on open containers, and Missouri was one of the few states never to enact state prohibition laws.
In West Virginia, the tax on spirits stood out to McAdams.
"In most states when you look across the board, spirit taxes tend to be almost always higher than beer or wine," McAdams said. "In West Virginia that is not the case" - wine is taxed more heavily - "and I imagine that probably has something to do with industries in the area."
Overall, McAdams said, they were surprised at how many states they thought would have lower taxes but leveled higher taxes and vice-versa.
Lisa Reveal, who works as Drug Emporium's wine director at its Patrick Street location in Charleston, was pleasantly surprised with the state's rank.
Her store carries around 2,000 varieties of wine and 275 to 300 different kinds of craft beers, and Reveal said in the last few years, the store has seen an increase in sales.
"When the state changed the law to allow higher-octane beers with 7, 8 or 9 percent of alcohol, that's when [sales] went gangbusters," Reveal said.
In 2009, West Virginia lawmakers agreed to allow the sale of beer that is as much as 12 percent alcohol. Before that, the limit was 6 percent
She added the store is increasing its selection as more and more beverages are approved in the state.
But while the state enjoys consumer-friendly taxes, Reveal said the state needs more suppliers for beer, wine and spirits.
"There are so many beers and wines not even registered in this state," Reveal said. "If some of these brewers or wineries would realize what a market West Virginia is, we can sell pretty much anything we get our hands on."
Many of the craft beer companies are smaller companies and are just not ready to make that financial commitment to come into a small market like West Virginia, Reveal said.
Despite the findings of his study, McAdams realizes that the taxes on a particular kind of drink aren't going to be the determining factor for a lot of drinkers.
"While the state taxes are certainly a piece of pricing and an important factor in the equation, they are by no means the largest determinant of what a beverage is going to cost the average consumer," McAdams said.
Reach Caitlin Cook at email@example.com or 304-348-5113.