Bipartisan Beer Bills Would Lower Excise Taxes

A pair of bipartisan, beer-related bills that would reduce federal excise taxes on both small and large brewers were introduced in Congress this week.

The Brewers Association (BA) – which represents the interest of America’s small and independent brewers — and the Beer Institute (BI) – which represents brewers and beer importers of varying sizes – announced the introduction of separate legislations into both the U.S. Senate and House of Representatives.

After reintroducing the Small BREW Act into the House of Representatives for the third time in February, the BA announced that the Senate version of the Small Brew Act, S. 917, had been reintroduced, this time by Senator Ben Cardin (D-Md.) and Senator Susan Collins (R-Me.).

The bill seeks to lower the federal excise tax for small brewers — defined in the bill as those producing fewer than 6 million barrels annually. Under current federal law, brewers are taxed at $7 per barrel for the first 60,000 barrels they produce. The bill aims to lower that rate to $3.50. If passed, the bill would also reduce the excise tax rate from $18 per barrel to $16 barrel for production between 60,001 and 2 million barrels.

While the BA was busy lobbying for small brewers, the BI was introducing the competing BEER Act of 2013 — a bill that would reduce excise taxes for all brewers and beer importers — into the House of Representatives. Under the BEER Act, small brewers would pay no federal excise tax on the first 15,000 barrels, $3.50 on barrels 15,001 to 60,000 and $9 per barrel for every barrel over 60,000 and up to 2 million.

But the bills really differ for brewers producing more than 2 million barrels. Under the Small BREW Act, the excise tax rate would remain at its current level, $18 per barrel, but in the BEER Act, that rate would be cut in half — benefitting the larger U.S. brewers as well.

Brewbound has been told that both bills have a slim chance of passing both houses, but that hasn’t stopped craft brewers from flocking to Capitol Hill. During March’s Craft Brewers Conference, held in Washington D.C., hundreds of brewers marched on the Hill to meet with lawmakers and lobby for change.

Both the BA and the BI claim that lowering taxes allows small brewers to increase sales, expand production facilities and create new jobs.

Both press releases are below:

Boulder, CO — Three months after the Small Brewer Reinvestment and Expanding Workforce Act (Small BREW Act) was reintroduced in the House of Representatives as H.R. 494, the Brewers Association (BA)—the not-for-profit trade group dedicated to promoting and protecting America’s small and independent craft brewers—announced the Senate version of the Small BREW Act, S. 917, was reintroduced by Senator Ben Cardin (D-Md.) and Senator Susan Collins (R-Me.).

The Small BREW Act seeks to recalibrate the federal beer excise tax that small brewers pay on every barrel of beer they produce, reflecting the evolution of the overall brewing industry. An earlier iteration of the bill, S. 534, was introduced in 2011 during the 112th Congress and enjoyed bi-partisan support.

Under current federal law, brewers making less than 2 million barrels annually pay $7 per barrel on the first 60,000 barrels they produce, and $18 per barrel on every barrel thereafter.  The Small BREW Act seeks to recalibrate that rate so that the smallest brewers and brewpubs would pay $3.50 on the first 60,000 barrels. For production between 60,001 and 2 million barrels the rate would be $16.00 per barrel.  Any brewer that exceeds 2 million barrels (about 1 percent of the U.S. beer market) would begin paying the full $18 rate. Breweries with an annual production of 6 million barrels or less would qualify for these tax rates.

“Small brewers have been anchors of local communities and America’s economy since the start of our history. In addition to making high-quality beers, craft brewers, including those in Maryland, create jobs and reinvest their profits back into their local economies,” said Senator Cardin, a member of the Senate Finance and Small Business committees. “The federal government needs to be investing in industries that invest in America and create real jobs here at home. With more than 2,400 small and independent breweries currently operating in the US, now is the time to take meaningful action to help them and our economy grow.”

“Maine is home to dozens of unique craft breweries and brewpubs that invigorate our economy by providing more than 1,000 jobs and drawing countless tourists into our state,” Senator Collins said. “In meeting with brewers across Maine, they always make clear to me how federal tax policy affects their businesses.  This bill, which I support, would help reduce the tax burden placed on many small brewers across our country, allowing them to thrive, create jobs, and further grow our economy.”

Nationally, small and independent brewers employ over 108,000 full- and part-time employees, generate more than $3 billion in wages and benefits, and pay more than $2.3 billion in business, personal and consumption taxes. Adjusting the tax rate would provide small brewers with an additional $60 million per year. This money would be used to support significant long-term investment, job creation, and economic expansion by growing their businesses regionally or nationally.

“Small brewers nationwide appreciate the leadership from Senator Cardin and Senator Collins on this issue and their unwavering support of the craft brewing community,” added Bob Pease, chief operating officer, Brewers Association. “We look forward to working with them and their Senate colleagues on the passage of this legislation, which will undoubtedly benefit our economy in the near and long term.

About the Brewers Association:

The Brewers Association is the not-for-profit trade association dedicated to small and independent American brewers, their craft beers and the community of brewing enthusiasts. The Brewers Association (BA) represents more than 70 percent of the brewing industry, and its members make more than 99 percent of the beer brewed in the U.S. The BA organizes events including the World Beer Cup®, Great American Beer Festival®, Craft Brewers Conference & BrewExpo America®, SAVOR?: An American Craft Beer & Food Experience and American Craft Beer Week®. The BA publishes The New Brewermagazine and its Brewers Publications division is the largest publisher of contemporary and relevant brewing literature for today’s craft brewers and homebrewers.

Beer lovers are invited to learn more about the dynamic world of craft beer at CraftBeer.com and about homebrewing via the BA’s American Homebrewers Association. Follow us on Twitter.

The Brewers Association is an equal opportunity employer and does not discriminate on the basis of race, color, national origin, gender, religion, age, disability, political beliefs, sexual orientation, or marital/familial status. The BA complies with provisions of Executive Order 11246 and the rules, regulations, and relevant orders of the Secretary of Labor.

WASHINGTON, DC – A bipartisan beer tax-relief bill introduced in the House of Representatives yesterday won immediate support and praise from America’s brewers and beer importers as a means of growing an industry that puts more than 2 million Americans to work.

Introduced by Reps. Tom Latham (R-IA) and Ron Kind (D-WI), the Brewers Excise and Economic Relief Act of 2013 (BEER Act), H.R. 1918, would reduce excise taxes for all brewers and beer importers, particularly the 90 percent of brewers which produce fewer than 15,000 barrels annually.

The Beer Institute, the trade association representing brewers, beer importers and supply-chain businesses, praised the BEER Act because it would encourage re-investment in the $246.5 billion industry.

“We commend the co-sponsors of the BEER Act for introducing fair legislation that fosters economic growth across the country, and enables small brewers to continue to grow their businesses,” said Joe McClain, president of the Beer Institute. “The last time federal taxes were raised on beer, 60,000 Americans lost their jobs. Our fragile economy, and local American businesses, cannot shoulder that unfair burden again.”

Except for small brewers, defined in the current U.S. tax code as brewers producing less than 2 million barrels annually, the current federal excise tax rate for beer is $18/barrel.

Under the BEER Act of 2013:

  • Small brewers would pay no federal excise tax on the first 15,000 barrels;
  • Small brewers would pay $3.50 on barrels 15,001 to 60,000;
  • Small brewers would pay $9 per barrel for every barrel over 60,000 and up to 2 million barrels;
  • For brewers producing more than 2 million barrels annually, and for all beer importers regardless of size, the federal excise tax rate would be $9 per barrel for every barrel.

On average, more than 40 percent of what American beer drinkers pay for a beer goes toward federal, state and local taxes—from excise to consumption to sales taxes, as well as the normal business taxes. That makes taxes the most expensive ingredient in beer today. Given that the average American beer drinker has an annual income of less than $50,000, these regressive taxes disproportionately affect middle-class Americans, who are already struggling through a sluggish recovery.

A higher tax would threaten an important industry that serves America in every state, generating a $246.5 billion economic impact. The beer industry directly and indirectly employs more than 2 million Americans, paying $78.9 billion in wages and benefits.

“The beer industry is creating quality jobs, stimulating local economies and contributing more than its fair share of revenue,” McClain added. “This legislation will help sustain an industry that is already aiding economic growth across the nation and will continue to grow the small brewer success story.”

The Beer Institute, established in 1986, is the national trade association for the brewing industry, representing both large and small brewers, as well as importers and industry suppliers. The Institute is committed to the development of sound public policy and to the values of civic duty and personal responsibility: www.BeerInstitute.org.

  • Overtaxed

    Why should there be any tax at all on the production? There is no VAT tax in this country per se but this qualifies as such. The brewers are taxed on the net income they produce and the payroll they produce. If politicians agree that reducing the tax will create jobs in this growing sector why can’t the same conclusion be made for overall tax reduction and minimum wage (works like a tax). Why does it work for one industry at the exclusion of others?