Mike Williams advocates for fair tax rate on ready-to-drink alcoholic beverages

In a recent House Appropriations meeting held on March 31, 2025, Arizona lawmakers engaged in a heated discussion regarding the taxation of ready-to-drink (RTD) alcoholic beverages. The meeting highlighted the complexities of the current tax structure and its implications for both consumers and the beverage industry.

Mike Williams, representing the Distilled Spirits Council, argued that the existing tax rate unfairly penalizes RTDs by charging $3 per gallon on the total volume of the drink, including mixers like soda, rather than just the alcohol content. He emphasized that this approach contrasts with traditional bar practices, where only the alcohol is taxed. Williams advocated for a more equitable tax rate, suggesting that it should be based solely on the alcohol percentage, which he argued would be more reflective of the product's nature.

The discussion also touched on the competitive landscape of the beverage industry, with Williams noting that RTDs are in direct competition with beer. He claimed that a fair tax structure could lead to increased state revenue as consumers shift from beer to RTDs. Williams further argued that RTDs could be a safer choice for younger drinkers, as they typically contain lower alcohol concentrations compared to traditional spirits mixed at home.

The meeting also featured comments from various lawmakers, some expressing support for the proposed changes while others raised concerns about the potential financial impact of a tax cut on state revenues. Representative Blackman voiced opposition to the tax reduction, citing a preference for broader tax relief measures that benefit all ratepayers.

As the meeting concluded, lawmakers voted on amendments related to the proposed tax changes, with mixed responses reflecting the ongoing debate over how best to structure alcohol taxation in Arizona. The discussions underscored the need for a comprehensive review of the state's tax policies, particularly as consumer preferences evolve and new products enter the market.

The outcome of this meeting could have significant implications for the beverage industry and state revenue, as lawmakers continue to navigate the complexities of taxation in a changing economic landscape. Further discussions and potential revisions to the tax code are anticipated as stakeholders seek a resolution that balances industry interests with fiscal responsibility.