Makers of RTD’s have been increasingly active in lobbying state legislators to lower taxes on the ready to drink cocktails. Their argument is that lower taxes will benefit the consumer by lowering the retail price.
But a recent analysis by Public Sector Consultants shows that in two states where the RTD tax was lowered, retail prices increased.
Michigan passed legislation last year that lowered the tax on certain RTD’s by 37% and Nebraska lowered the RTD tax last year by 75%. But since the legislation passed in those states, the average price of RTD’s has increased by 44% in Michigan and 65% in Nebraska.
The effort by large manufacturers to lower RTD taxes will likely continue on a state-by-state basis. But the recent study may take some of the wind out of their sail; unless they are able to contrive a new argument of how and why lowering the tax on this one specific alcoholic beverage would be good public policy.
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