As most distillers know well, Uncle
Sam makes a pretty penny on each bottle of alcohol manufactured in
the United States. Federal excise taxes, on distilled spirits in
particular, are higher than those imposed on almost any other
consumer good. When you add in state and local excise and sales
taxes, domestic taxes can account for as much as one-half of a
bottle's sales price. And since these taxes are passed on to
the consumer in the form of higher prices, it's no wonder
distillers are looking to foreign markets for their products. This
is because the federal excise tax is waived when alcohol is
exported.
While distillers can catch a break by shipping their products
abroad, they should be sure to investigate whether the receiving
countries impose importation or other taxes. Indeed, deciding
whether to export American-made spirits can be a balancing act.
Shipping costs and taxes in other countries may offset the
tax-savings realized by exporting. Nevertheless, as
