E-Malt.com News article: USA, NY: Loss of tax exemption could cause a raise in beer prices

The price of beer made by most of the New York’s 90-plus craft brewers could be going up, perhaps by as much as $1 a pint for draft beer or $1 a sixpack, Syracuse.com reported on May, 25.

The reason is that a state court in March ruled a special excise tax exemption enjoyed by almost all of the state’s breweries is illegal. An out-of-state beer distributor had sued over the tax exemption, saying it placed an unfair cost burden on beers it hoped to sell in New York.

The brewers association is lobbying for bills being drafted by some state lawmakers that would restore the exemption while addressing the state Apellate Division’s legal concerns. The brewers hope the bills can be passed before the Legislature adjourns for the summer.

David Katleski, owner of Empire Brewing Co. in Syracuse and president of the state brewers association, said the exemption, which took effect in the late 1990s, has helped the state’s brewing industry double in size during the past decade.

The state’s 90 or so breweries and brewpubs pump $200 mln into the state’s economy and employ more than 3,000 people, according to the brewers association.

“The pace of growth for the brewing industry in New York has been phenomenal,” Katleski said. “But it could be hitting a wall with this tax issue.”

Some brewers faced with the new tax bills are beginning to scale back their expansion plans, Katleski said, even if they’re brewing at capacity and need to grow.

The exemption applied to any New York-based brewery that produces its beer in the state. It eliminated the excise tax on production up to 200,000 barrels a year. A similar exemption eliminated the $150 per brand label registration fee collected by the state, for New York-brewed brands that sell less than 15,000 barrels a year.

Only a handful of breweries in the state exceed those numbers or otherwise fail to qualify for the exemption. One of those is the Anheuser-Busch InBev plant in Lysander, which is owned by a company based in Belgium.

Katleski said the loss of the exemption could cost his small brewpub in Armory Square about $20,000 a year and put a crimp in his plans to open a free-standing microbrewery in Cazenovia.

The much larger Brooklyn Brewery in New York City would have to pay more than $500,000 in excise tax without the exemption.

The current state budget was approved before the exemption was ruled illegal, so eliminating the tax would not cause any shortfalls in the state’s revenues, Katleski said.


29 May, 2012