E-Malt.com News article: USA, WA: Craft Beverage Modernization and Tax Reform Act aims at cutting taxes on craft beer

After years of failed and often opposing attempts in Congress to cut the beer excise tax, big and small brewers have gotten behind a bill that would benefit both, STLtoday.com reported on June 18.

It doesn't guarantee anything in a Congress that has struggled for years with tax reform and is reticent to do anything to add to the deficit. But for the first time, big brewers and the rapidly growing craft beer industry and - potentially - the distributors who haul their beer to consumers, could be working for the same bill.

“Huge breakthrough,” said Dan Kopman, co-founder of St. Louis’s largest craft brewer, Schlafly Beers, who said cuts in the legislation, would spark a robust craft-brew industry ready for greater growth.

James A. McGreevy III, president and CEO of the Beer Institute, which represents big brewers and importers, agreed.

“When you have the two main trade groups for beer brewers in the United States working together to pass tax reform and tax relief, you have a pretty good shot at it,” he said.

He was referring to the Brewers Association, which represents Schafly Beer and other small and independent craft brewers, and McGreevy’s group. Both have declared support for the “Craft Beverage Modernization and Tax Reform Act” introduced last week by Senator Ron Wyden, D-Ore.

“It brings larger brewers and the smaller brewers together,” said Bob Pease, CEO of the Boulder, Colorado-based Brewers Association.

He also said the bill “tempers the opposition from the National Beer Wholesalers Association, which is a very significant development.”

The National Beer Wholesalers Association, while not offering an outright endorsement, called the Wyden compromise a “step in the right direction.” It had earlier opposed another tax-relief bill backed by the small brewers while supporting one, co-sponsored by Senator Roy Blunt, Missouri, which was backed by the bigger brewers.

Wyden’s compromise bill has not been “scored” for its potential cost to the treasury, although Pease said the two beer associations estimate it would reduce tax revenue by about $130 million.

Brian Hart, Blunt’s communications director, said his boss’s staff was still reviewing Wyden’s legislation.

Wyden’s bill would cut the per-barrel tax for the first 60,000 barrels from $7 to $3.50, for brewers producing less than 2 million annual barrels, with the tax going to $16 a barrel for subsequent production up to 2 million. Brewers making more than 2 million barrels a year - major producers such as Anheuser-Busch - would pay $16 a barrel on the first 6 million produced and $18 a barrel on all the rest. A barrel consists of 31 gallons.

For a small brewer such as Schlafly Beer, the Wyden legislation would cut $210,000 in excise taxes for the first 60,000 produced.

“With those savings we can either look to build other breweries in St. Louis or invest in more production and promotion of current facilities,” Kopman said.

“I would hope that my colleagues at the Beer Institute and Anheuser-Busch and Coors would feel the same way,” he said. It’s a “huge step forward for the industry and it has been in the works for a long time.”

Pease said that “without question, on the small brewers’ side, our members would take that money, reinvest it in the business and grow the production.”

“When craft brewers make more money they hire more people,” he said.

A spokeswoman for Anheuser-Busch directed questions on the bill to McGreevy, head of the Brewers Association.

He said the impetus for the big and small brewers to get together came after “we all heard loud and clear from members of Congress” that neither Blunt’s nor Paulsen’s bills could pass.

The Beer Institute says the brewery industry is a $246 billion annual industry in the U.S. The Brewers Association says that the number of American craft breweries - independent producers of less than 6 million barrels annually - increased from 2,401 in 2012 to 3,418 last year.

It says that while overall beer sales were up 0.5 percent in 2014 to just over 197 million barrels, sales of craft beer rose 17.6 percent. Exports of American craft beers rose by 36 percent last year to about 383,000 barrels.


19 June, 2015