A bipartisan bill is reigniting the fight to give tax deductions to bars and restaurants with draft beer systems.
U.S. Reps. Darin LaHood (R-IL) and Steven Horsford (D-NV) introduced the Creating Hospitality Economic Enhancement for Restaurants and Servers (CHEERS) Act Thursday.
The proposed legislation (H.R. 7577) would expand Section 179D deductions to apply to “all new keg and tap properties” in an attempt to “help revitalize hospitality establishments still struggling years after the pandemic,” according to a press release.
The existing tax code offers deductions for qualifying investments in “energy-efficient systems on commercial premises.” The CHEERS Act would also give additional benefit to companies “for the remodeling of draft property and for lost or stolen kegs.”
“Illinois has a rich history of craft brewers and local bars from Chicago to Peoria and beyond,” LaHood said in the release. “Many of our bars, restaurants, and the hospitality sector at large are still feeling the negative effects of the pandemic and subsequent lockdown policies. This bipartisan bill will support these local establishments by incentivizing the expansion of tap lines and keg equipment on commercial premises.”
“Las Vegas is our nation’s hospitality and entertainment capital, if not the world,” Horsford added. “The CHEERS Act would boost not only our smaller bars, clubs and entertainment venues but also many of our casinos, hotels and arenas. This will allow many small business owners in my district to grow their business and invest more in their employees. And we will reduce waste created by using smaller, disposable containers at many restaurants, bars and other venues.”
Draft beer sales were already in decline prior to the COVID-19 pandemic, but have failed to return to pre-pandemic levels. Brewers Association (BA) chief economist Bart Watson warned at the end of 2023 that draft beer sales could reach “their lowest level since World War II,” and that there is “zero reason to expect growth in 2024.”
Several industry organizations are applauding the bill, including the BA, Beer Institute (BI), National Beer Wholesalers Association (NBWA), American Beverage Licensees (ABL), Steel Keg Association, National Restaurant Association, International Franchise Association, American Cider Association, Independent Restaurant Coalition, and BeerBoard.
“The beer industry is committed to supporting its partners in the hospitality industry that were deeply impacted by the pandemic,” BI president and CEO Brian Crawford said in the release. “That’s why we applaud Reps. LaHood and Horsford for introducing the CHEERS Act, which will provide relief to your favorite local pubs, bars and restaurants nationwide that serve fresh, ice-cold beer on draft. Beer is America’s favorite alcohol beverage, and with draft systems in tens of thousands of establishments across the country, this bill will allow businesses to create more jobs and stimulate local economies from coast to coast.”
“In the wake of the ongoing pandemic, the independent restaurant and bar community has grappled with a notable decline in draft beer sales,” Erika Polmar, executive director for the Independent Restaurant Coalition, added. “This unfortunate trend presents yet another significant challenge to the profitability of these establishments that operate on razor-thin margins. Recognizing the pressing need for support, the Independent Restaurant Coalition endorses the CHEERS Act.”
Bars and restaurants are also backing the bill, including the Ohio-based Winking Lizard Tavern chain and New York-based Tully’s.
“Not only is draft beer the freshest and the way the brewer intends us to drink their beer, but it is also the most green and sustainable packaging as there is no waste,” Winking Lizard co-owner John Lane said in the release. “Unlike bottles and cans that land in the landfill, kegs are refilled and rotated in the market, ensuring a fresh beer with no packaging waste!”
Beer industry advocates long pushed for a tax credit to alleviate the loss of revenue from kegged beer that spoiled during the pandemic-driven on-premise closures of 2020. Efforts were included in the The Hospitality and Commerce Jobs Recovery Act, introduced to the House in February 2021. At the time, the BI estimated that $900 million worth of beer had to be destroyed when the on-premise channel shut down in March 2020.
Brewbound highlighted draft trends and hurdles last year during Brew Talks in Denver, Colorado. The first was a national conversation with Dogfish Head co-founder Sam Calagione, industry consultant Jason Murphy and Tamarron Consulting co-founder and president Lori Scheiffler, exploring draft as a “generational problem,” not a pandemic problem.
After, Ska Brewing president and co-founder David Thibodeau, Elite Brands of Colorado account manager Katie Nierling and Holidaily Brewing founder Karen Hertz talked about regional trends in Colorado and the need to “fight for draft.” Rewatch both panels in the links above.