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Champagne shortages, alcohol taxes increase costs of ringing in New Year 2022

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If you're celebrating the end of 2021 and welcoming 2022 with an adult beverage at midnight, enjoy!

When you bought your booze, you might have noticed it cost a bit more, especially if you go bubbly. Apparently, says Wine Searcher, "The much-vaunted Champagne drought of 2021 is real – and it's starting to show in the retail sector."

Wine Enthusiast says here in the United States, we're in the early stages of a Champagne shortage that is expected to last several years.

When things are hard to get, the ol' law of supply and demand means the price tag definitely goes up.

Bubbling up bubbly tax: Part of the price all intoxicating infusions are affected by federal and state alcohol excise taxes.

The map below from the Tax Foundation shows the range of state Champagne excise taxes across the country as of 2020.

Champagne-taxes-by-state-2020_Tax-Foundation

"Most states use the same excise tax rates for champagne and table wine, but 14 have alternate rates for sparkling wine," notes Janelle Cammenga, policy analyst at the Washington, D.C.-based nonprofit tax policy organization.

Booze-flation ahead: Personally, I'm a beer drinker. But I do uncork a bottle of wine now and then. And, according to a recent Los Angeles Times article, me and my fellow beer and wine imbibers need to brace for booze-flation in the coming new year.

The news is worse for those with more discerning potable palates. The Distilled Spirits Council of the United States (DISCUS) warns more discerning drinkers to get ready to pony up more.

DISCUS' Luxury Brand Index (LBI), a new tool the trade group created to analyze sales of spirits brands at the top end of the distilled spirits market, shows luxury brands grew 47 percent in the third quarter of 2021 compared with the same quarter of 2020. That pace has been more than twice the annual average growth rate of 18 percent between 2015 and 2020, says DISCUS.

"In addition to the premiumization trends of recent years, the pandemic forced many consumers to change the way they purchased and enjoyed their favorite spirits," said Christine LoCascio, chief of public policy at DISCUS. "What resulted was a continued shift towards high-end spirits products and experimentation with cocktail creation at home. The restrictions brought on by the pandemic served as a catalyst for an already growing category in the spirits marketplace, and we are confident this trend will continue for holiday purchases."

Taxing all intoxicating infusions: While COVID complications have changed things, one alcohol-related item remains the same. Regardless of your alcoholic beverage of choice, the price you pay likely was affected by federal and state alcohol excise taxes.

Uncle Sam and most states tax all alcoholic beverages, not just special occasion Champagne. In all cases, this is an excise tax generally collected from the producers or importers. There's also added state and local sales tax in most jurisdictions.

The various alcohol tax amounts can be sobering.

For wine alone, which is what the hubby and I plan to toast with since we're opening a bottle to make to make a relatively fancy end-of-2021 dinner, the U.S. Treasury's Alcohol and Tobacco Tax and Trade Bureau (TTB) designates separate alcohol excise tax rates on still, artificially carbonated, and sparkling wines, as well as hard cider. Alcohol content also comes into play

Variables also come into play with the federal excise tax on beer, my preferred buzzy beverage. Rates are assessed based on how much and what type is brewed.

State alcohol excise add-ons: Then we have, as noted in the Tax Foundation Champagne map, the various state alcohol taxes.

You can find the latest rates in the Federation of Tax Administrators' tables detailing each state's tax rates on beer, wine, and distilled spirits.

Whatever is in the glass you raise tonight at the stroke of midnight, enjoy it responsibly. I'll be joining you in wishing for a Happy, Healthy, and less Hectic New Year 2022.

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