Majority of US Senators Support Permanent Tax Reform for Brewers, Importers

A majority of U.S. Senators support making permanent excise tax relief for alcohol producers and importers.

The 2019 version of the Craft Beverage Modernization and Tax Reform Act (CBMTRA) added its 52nd supporter in the U.S. Senate today, with Sen. Mazie Hirono (D-HI) becoming a co-sponsor. The legislation seeks to make permanent the two years of tax breaks that alcohol producers and importers received as part of the Tax Cuts and Jobs Act, which are slated to expire at the end of this year.

“Today is a seminal day in our quest to get brewer tax relief extended or made permanent,” Beer Institute (BI) president and CEO Jim McGreevy told Brewbound. He added that making the tax breaks permanent is “the holy grail of this operation.”

In a press release, Brewers Association (BA) president and CEO Bob Pease called majority support in the Senate “an important milestone” and praised the legislation’s bipartisan support.

“With 28 Democrats, 22 Republicans and one Independent as co-sponsors in the Senate, and 86 Republicans and 70 Democrats in the House, support for the bill demonstrates the immense impact the federal excise tax has had on America’s small and independent brewing industry, empowering these small businesses in an extraordinary way,” he said.

According to McGreevy, excise tax relief for brewers has received support from previous co-sponsors, as well as many freshmen lawmakers, which he called “heartening.”

“I think many of them have taken to this bill as an example of good policy that helps businesses big and small,” he said of freshmen lawmakers.

McGreevy added that the bill’s bipartisan support show how “working together is better than fighting.” Several other alcohol trade groups have joined the Beer Institute and the Brewers Association in lobbying for the passage of the bill, including the Distilled Spirits Council of the United States (DISCUS), the American Craft Spirits Association, Wine America, the Wine Institute, and the U.S. Association of Cider Makers.

“Everybody benefits from this tax relief,” McGreevy said. “And everybody benefits from going out and getting a lot of co-sponsors on the bill.”

The National Beer Wholesalers Association (NBWA) is also backing those efforts.

“NBWA continues to support the brewers’ efforts to maintain a lower federal excised tax for brewers and importers of all sizes,” Laurie Knight, NBWA executive vice president for government affairs, told Brewbound.

CBMTRA was reintroduced by Sens. Ron Wyden (D-OR) and Roy Blunt (R-MO) in February. Shortly thereafter, Reps. Ron Kind (D-WI) and Mike Kelly (R-PA) introduced a companion bill in the House of Representatives. Thus far, 156 of the House’s 435 members have agreed to co-sponsor the bill.

At stake for the beer industry is about $130 million in annual savings, according to McGreevy. Meanwhile, the BA said the tax breaks have saved small and independent craft breweries upwards of $80 million annually and 99 percent of small brewers have benefitted from cutting the federal excise tax in half.

So what has tax relief looked like the last two years? The federal excise tax for domestic brewers producing fewer than 2 million barrels annually was reduced from $7 to $3.50 per barrel on the first 60,000 barrels. The legislation also cut the federal excise tax to $16 per barrel on the first 6 million barrels for all other brewers and beer importers, while maintaining the $18 per barrel excise tax for brewers producing more than 6 million barrels.

The 2019 version of CBMTRA would make those changes permanent. Nevertheless, it’s unclear when Congress could take the legislation under consideration. McGreevy said he expects lawmakers to broach taxes later in the year. In the meantime, he said the industry’s trade groups and their respective members need to continue lobbying lawmakers and adding co-sponsors.

“We have a growing consensus once again in a second term of Congress that our bill is good policy and good politics,” he said. “It’s now a matter of watching the tea leaves, understanding through the relationships that we have how a bill is going to develop in the Ways and Means Committee or the Senate Finance Committee, and being ready to advocate for our bill’s inclusion in whatever bigger tax package comes along.”

Majority support in the Senate comes during a crucial lobbying week for the beer industry. Hundreds of craft brewers will descend upon Washington, D.C. for the organization’s annual “hill climb” this week as well as Friday’s SAVOR craft beer and food pairing event.

According to the BA, more than 130 brewers from 49 states are expected to participate in the hill climb to meet Wyden, Blunt and members of the Ways and Means and Finance committees, among other lawmakers.

Those efforts come as the BA has increased its efforts to influence lawmakers by forming a political action committee (PAC). During last month’s Craft Brewers Conference in Denver, Pease called the organization’s efforts to make the tax cuts permanent a “top priority,” and he and other BA leaders solicited donations for the PAC.

Tax reform and other industry topics will also be discussed during Brewbound’s Brew Talks meetup — featuring a panel discussion with McGreevy, NBWA president and CEO Craig Purser and BA senior vice president Paul Gatza — at Penn Social from noon to 3 p.m. on Friday, May 17.