And Then There Was One – Tax Bill

After a ‘battle of the bills” between two competing beer tax bills in Congress, an Oregon Senator has stepped forward with a singular solution; a one-size-fits-all tax reduction bill for wine, spirits and beer.

Senator Ron Wyden (D-OR) introduced today the Craft Beverage Modernization and Tax Reform Act (S. 1562) which aims to reduce excise taxes for brewers, vintners, cider makers and distillers.

The bill combines components of both the Small BREW Act (introduced by the Brewers Association) and the Fair BEER Act (introduced by the Beer Institute). These two bills have received heavy lobbying on Capitol Hill in recent months by both groups.

The new bill will cut in half the federal excise tax on the first 60,000 bbls of production for any brewery producing less than 2 million barrels per year. This is in stark contrast to the BA bill which gave the same tax break but for any brewery producing up to 6 million bbls per year. Extending the definition of “small brewer” from 2 to 6 million barrels was a contentious point for the BI and the National Beer Wholesalers Association (NBWA). Senate bill 1562 also gives a tax break of $2.00 per bbl for large brewers and importers, which the BI bill sought.

Currently any domestic brewery producing more than 2 million bbls per year pays $18 per bbls in federal excise tax. Any brewery producing less than 2 million bbls receives the “small brewer’s tax differential” which is $7.00 on all production up 60,000 bbls and then $18 on all production over 60,000 bbls. There is no current tax differential for imported beer.

Here are the details of the new bill;
• Any domestic brewery that produces less than 2 million barrels a year would pay $3.50/barrel on the first 60,000 barrels and $16 barrel on anything above 60,000 up to 2 million barrels.
• Any domestic brewery that produces more than 2 million barrels a year would pay $16/barrel on the first 6 million barrels.
• All importers would pay $16/barrel on the first barrel they import through barrel number 6 million. Those importers that import more than 2 million barrels would pay $18/barrel on any barrel over 6 million, like the large brewers.

BA has come out in support of the bill while there has been unofficial and tentative support from the BI and NBWA.

It will continue to be a long and difficult haul even for this singular bill. It is unlikely to be passed until it gets attached to a larger tax bill vehicle. Most people don’t feel that this will happen until after the 2016 election, meaning a tax break for craft brewers is mostly likely at least 2 years away.