In the past, this blog has discussed the Small BREW Act, a proposal to reduce the federal excise tax paid by craft breweries. That legislation was supported by the Brewers Association, the organization representing the interests of the craft beer industry. Other segments of the beer industry supported the Fair BEER Act, a different tax proposal aimed at changing the excise tax structure. The industry, as a whole, was divided. See our previous posts.
Today we learn about a compromise that unites the industry: the Craft Beverage Modernization and Tax Reform Act (S. 1562). The Brewers Association just announced that it supports this new legislation, recognizing that compromise is part of the process.
The Beer Institute also supports this new legislation. That organization primarily represents the interests of other, non-craft segments of the beer industry and previously supported the Fair BEER Act, a separate beer tax relief proposal viewed as less-beneficial for the craft beer industry.
Below we share information that explains why each organization is supporting the Craft Beverage Modernization and Tax Reform Act.
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Here is the letter the Brewers Association sent its members:
I’m writing to let you know about the introduction of new legislation that would recalibrate federal excise taxes for small brewers. The Brewers Association supports the Craft Beverage Modernization and Tax Reform Act (S. 1562), which is comprehensive legislation that would not only recalibrate federal excise taxes for small brewers but also enhance their ability to produce great beers and create jobs. If enacted, this legislation will achieve the job creation and brewing capacity reinvestment goals of the Small BREW Act for which the BA has actively advocated.
About the bill
The bill seeks to ensure the continued growth of America’s craft beverage industries by reducing excise taxes, compliance burdens and regulations for brewers, cider makers, vintners and distillers. The Craft Beverage Modernization and Tax Reform Act would provide the following federal excise tax structure for beer:
Any domestic brewery that produces less than 2 million barrels a year would pay $3.50/barrel on the first 60,000 barrels and $16 barrel on anything above 60,000 up to 2 million barrels.
Any domestic brewery that produces more than 2 million barrels a year would pay $16/barrel on the first 6 million barrels.
All importers would pay $16/barrel on the first barrel they import through barrel number 6 million. Those importers that import more than 2 million barrels would pay $18/barrel on any barrel over 6 million, like the large brewers.
How did we get here?
Senator Ron Wyden (D-OR), co-chair of the Senate Bipartisan Small Brewers Caucus, has been a longtime champion for America’s craft brewers and has been diligently working to reduce federal excise taxes for craft brewers through his co-sponsorship of the Small BREW Act. This new bill goes even further to ensure growth for small and independent brewers.
Senator Wyden and his staff have been working on a broad beverage alcohol piece of legislation for over five months. BA government affairs staff and Brewers Association counsel provided significant input on the content of the legislation—including on items outside of federal excise tax that could be included in this legislation.
The legislation is focused on helping craft producers of beer, cider, wine and spirits. The approach of Senator Wyden’s team was to “give something to everyone” to foster cooperation. The Wyden staff also felt that by involving other beverage alcohol entities they could build a strong coalition of support.
What is the BA’s position on the Craft Beverage Modernization and Tax Reform Act?
The Brewers Association has always maintained we are open to compromise on federal excise tax reform. We support the Small BREW Act, and we also believe that Senator Wyden’s effort—which contains all the elements of the Small BREW Act—is a good compromise that would benefit America’s small brewers.
In summary
The Craft Beverage Modernization and Tax Reform Act is fair, equitable and comprehensive legislation that will allow small brewers to reinvest in their businesses, reinvigorate local economies and continue their role in rejuvenating the job market in the U.S., and the Brewers Association supports this legislation.
Here’s the press release from the Beer Institute:
Beer Industry Unites Behind Wyden Tax Bill
Beer Institute Lauds Proposal as Comprehensive Reform
WASHINGTON – The Beer Institute, a national trade association representing brewers, beer importers and supply industries, issued a statement today in support of the Craft Beverage Modernization and Tax Reform Act, S. 1562, proposed by Sen. Ron Wyden, D-Ore., which provides fair, equitable and comprehensive reform of the federal excise tax on beer. The Beer Institute has been working to find common ground to unite the brewing industry behind one federal excise tax relief bill. The Wyden proposal accomplishes that.
Notably, the Wyden proposal:
· Reduces the federal excise tax to $3.50 per barrel on the first 60,000 barrels for domestic brewers producing fewer than 2 million barrels annually.
· Reduces the federal excise tax to $16 per barrel on the first 6 million barrels for all other brewers and all beer importers.
· Keeps the excise tax at the current $18 per barrel rate for barrelage over 6 million.
“We applaud Senator Wyden for this positive step forward in addressing beer excise tax reform in a fair, equitable and comprehensive way,” said Jim McGreevy, president and CEO of the Beer Institute. “The beer-specific provisions of this bill move the ball forward for brewers of all sizes. We know that when all facets of the industry agree, we are stronger together.”
Like the Fair BEER Act, which is supported by the Beer Institute, the National Beer Wholesalers Association (NBWA) and others, this legislation takes a comprehensive approach to reform and includes all types of brewers and beer importers. The Fair BEER Act was introduced in February with bipartisan, bicameral support.
“We got to this point because of the leadership from Sens. Roy Blunt, R-Mo., and Tammy Baldwin, D-Wis. and Reps. Steve Womack, R-Ark., and Ron Kind, D-Wis., and the partnership of groups like NBWA, on the Fair BEER Act and their support of fair, equitable and comprehensive beer tax reform,” McGreevy said. “We look forward to working with Sen. Wyden and others on ways we can grow support for the beer provisions of this new bill. And we will work very hard to ensure that beer drinkers, who ultimately pay these hidden excise taxes, get tax relief.”
