Government, Law, and Manufacturing

Bipartisan beverage bill turns all-inclusive

Each industry is unique, but legislation targets antiquated rules and tax issues in all.

June 19, 2015
| By Pat Evans |
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An Oregon senator has rolled several beverage industry proposals into one and introduced a new bill to Congress.

The Craft Beverage Modernization and Tax Reform Act put together by Sen. Ron Wyden, D-Ore., combines and builds on several legislative proposals, including the Small BREW Act, Fair BEER Act, Distillery Excise Tax Reform Act, the CIDER Act, AGED Spirits Act and the Craft Beverage Bond Simplification Act.

“Each of these industries is unique, and this legislation takes targeted approaches to update antiquated rules and reduce taxes for these growing businesses to ensure that these innovators continue to create high-quality jobs,” Wyden said upon introducing the bipartisan bill.

Three weeks ago, the Business Journal reported on the differences of the originally proposed bills and the differences in the two trade group supporters, The Beer Institute and the Brewers Association.

Michigan Brewers Guild Executive Director Scott Graham said proposed changes to the beverage industries will only help them grow — not simply put more money into owners’ pockets.

Graham said tax relief is important because it will help solve one of the issues small breweries are facing: cash flow.

“They aren’t going to go buy a new car with the money,” he said. “They’ll reinvest in the business and making their community a stronger one. It’s more tanks, more shifts, more workers.

“That’s huge to our industry.”

Wyden’s proposal has garnered support from both organizations as well as the American Craft Spirits Association.

“We applaud Sen. 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.”

The new proposal would reduce federal excise tax to $3.50 per barrel on the first 60,000 barrels for domestic brewers producing less than 2 million barrels annually. It also reduces excise tax to $16 per barrel on the first 6 million barrels for all other brewers and beer importers. Beyond 6 million barrels, the tax stays at the current $18-per-barrel rate.

The proposal also simplifies beer formulation approvals by the Alcohol and Tobacco Tax and Trade Bureau and Food and Drug Administration.

It would also allow producers with tax liability of less than $50,000 to file quarterly and would remove bonding requirements for those taxpayers and simplify beer recordkeeping and inventory rules.

“Small brewers are economic engines in this country, and the Brewers Association supports legislation that will bolster their ability to produce great beers and create jobs,” said Bob Pease, CEO of the Brewers Association. “Not only would this legislation recalibrate excise taxes — an issue for which we have long advocated — it would ease a number of burdens for brewers, including simplifying label approvals and repealing unnecessary inventory restrictions.”

For cider, the definition of the beverage is expanded to include alcohol by volume of greater than 7 percent, carbonation and more than just apple cider. Currently, only ciders meeting those criteria are taxed at the current reduced tax rate.

Tax credits for small wine producers also would be expanded, as would the alcohol threshold for certain wines.

For distilleries, the current tax rate is $13.50 per proof gallon but would be dropped to $2.70 for the first 100,000 gallons of distilled spirits produced or imported annually. The prohibition of home distillation also would be removed.

Several other complicated accounting rules for aging and production would be simplified or eliminated.

“The Craft Beverage Modernization and Tax Reform Act is a comprehensive piece of legislation that tackles some of the most significant barriers that America’s distillers currently face, and it provides a measure of excise tax parity that will boost investment and create new jobs in communities across the country,’ said Thomas Mooney, president of the American Craft Spirits Association and co-owner and CEO of House Spirits Distillery in Portland, Ore.

“These issues are important to the rapidly growing number of American craft distillers. On behalf of more than 700 distillers across the country, and as an Oregon distiller myself, I thank Senator Wyden for his leadership in taking on these important issues in the Senate.”

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