Craft Brewers: We Weren’t All There to Back the BEER Act

A dispute over which tax relief measure they ultimately support has led to tension between the Beer Institute (BI) and some Brewers Association (BA) board members.

A press release from the BI — which purports to represent the interests of both large and small brewers— made its way across the wires on Tuesday. Language in the release suggested executives from popular craft brewers Deschutes Brewery, Bell’s Brewery, Brooklyn Brewery and F.X. Matt Brewing Company had traveled to Washington this week to support of the BI-backed BEER Act of 2013, a bill introduced into the House of Representatives last week that would reduce excise taxes for all brewers and beer importers.

But some brewers that spoke with this week said that wasn’t an entirely accurate representation of why they’d gone to visit Foggy Bottom.

While it’s true that CEO’s from those small craft companies — as well top executives from Anheuser-Busch, MillerCoors, Heineken USA, North American Breweries and Crown Imports — were in Washington D.C. for the BI’s annual ‘Brewer’s Day fly-in,’ they weren’t all there to lend their complete support for the BEER Act.

Deschutes Brewery founder Gary Fish said that he favors the Brewers Association’s own bill, the Small BREW Act — a bill that would lower federal excise taxes for small brewers while maintaining excise tax rates for those manufacturing more than 2 million barrels annually.

But, he added, that doesn’t mean he’s completely rejecting the BEER Act either.

“I don’t support tax increases for anyone in the beer industry,” he said. “I am generally in support of any reduction to excise tax.”

Fish said he had been caught off-guard by Tuesday’s Beer Institute statement.

“My presence in Washington was to support the beer industry, not to support the BEER Act,” he said.

In fact, while Brooklyn Brewery co-founder Steve Hindy, Bell’s Brewery founder Larry Bell and F.X. Matt CEO Nick Matt took to Capitol Hill for legislative visits on Wednesday, Fish took a pass.

“As the vice chairman of the Brewers Association, that press release put me in an awkward situation,” Fish said.

So where do the other craft brewers stand?

Brooklyn Brewery co-founder Steve Hindy

Hindy, a member of the BA’s government affairs committee and the organization’s representative on the BI’s board, said he’s in favor of any federal tax relief for craft brewers — even though the bills differ in content.

“The Beer Institute has said it opposes the BREW Act and I am on the board as a small brewer member,” he said. “I have obviously opposed the move on their part to oppose the BREW Act and I was outvoted. But as a matter of principle, I am in favor of any move to reduce beer excise taxes.”

Bell said he’d like to see the two organizations start working together on a single bill.

Bell’s Brewery founder Larry Bell

“I think the two organizations probably agree 95 percent of the way on what is out there,” he said. “I would love to see the industry come to congress with one unified voice. As a member of the Brewers Association and an ex-officio board member of Beer Institute, my hope and my goal is that the two industries will find some common ground.”

Bell said he recognizes the tension that having two similar-but-different bills engendered — but he also welcomed the chance to visit with the some of the country’s most powerful lawmakers.

“I have my foot in both boats, but this is my chance to talk these guys in Washington,” he said. “I think there are flaws in both bills and I don’t think either bill, as presented, will pass. Having these two groups carping at each other is not doing anyone any favors. I just want to see everyone play nice in the sandbox together.”

The differences between the bills are subtle: The Small BREW Act would lower taxes from $7 to $3.50 per barrel for brewers making less than 6 million barrels annually on their first 60,000 barrels. If passed, the bill would also reduce the excise tax rate from $18 per barrel to $16 per barrel for production between 60,001 and 2 million barrels.

Under the BEER Act, small brewers (those making less than 2 million barrels) 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. 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.

If passed, the BEER Act would amount to about $1.7 billion in tax reductions for brewers over the course of a single year and $16.7 billion over 10 years. The Small BREW Act would create $65 million in reductions in one year and $651 million over 10 years.

Most individuals spoke to think the current likelihood of either bill passing is slim. Hindy said he feels the BREW Act has the best chance, however.

“I think there is a lot of sympathy for the BREW Act as a job creation law and I think that is something they are looking for here in D.C.,” he said.

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