US Senate Task Force Supports Permanent Excise Tax Relief for Brewers

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The beer industry’s efforts to make federal excise tax relief for brewers permanent received a boost Tuesday when members of a bipartisan congressional task force expressed support for the cause.

U.S. Senate Finance Committee chairman Chuck Grassley (R-IA) and ranking member Ron Wyden (D-OR) released a report from the Individual, Excise, and Other Temporary Tax Policy Task Force, which called for the Craft Beverage Modernization and Tax Reform Act (CBMTRA) to be permanently enacted.

“The Task Force would like not only to have this provision extended, but furthermore see the Craft Beverage Modernization and Tax Reform Act enacted on a permanent basis,” the members wrote.

The task force’s members — Senate Finance Committee members Pat Roberts (R-KS), Robert Menendez (D-NJ), Steve Daines (R-MT) and Maggie Hassan (D-NH) — added that they each cosponsor the 2019 version of CBMTRA, S. 362.

Additionally, Sen. Roy Blunt (R-MO), who introduced the bill with Wyden, sent a letter to the task force in support of the legislation.

In a statement, Beer Institute president (BI) and CEO Jim McGreevy called the task force’s report “another step forward.”

“We agree with the task force that federal excise tax relief for all brewers and beer importers should at least be extended, and at best be made permanent,” he added. “Ensuring all brewers and beer importers can count on federal excise tax relief is key to making sure our nation’s more than 7,000 active brewers continue to thrive, innovate and provide Americans with more varieties and styles of beer — our nation’s most popular alcohol beverage.”

Alcohol producers and importers are currently receiving two years of excise tax relief, which was included in the Tax Cuts and Jobs Act of 2017. However, those cuts are slated to expire at the end of 2019.

The 2019 version of CBMTRA would lock in an excise tax rate of $3.50 per barrel (a reduction from $7 per barrel) on the first 60,000 barrels for domestic brewers producing fewer than 2 million barrels annually. The legislation also permanently sets 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.

In June, the House Ways and Means Committee approved a one-year extension of that tax relief. That legislation is awaiting a hearing on the House floor, where 272 of the 535 lawmakers cosponsor the bill.

Tuesday’s task force recommendation could also foreshadow a path to passing in the Senate, where 68 Senators cosponsor the measure.

Brewers Association (BA) president and CEO Bob Pease called the task force’s support is a “strong step in the right direction.”

“We are very appreciative of the strong bipartisan support in this Congress, in both the Senate and House, for legislation making the excise tax recalibration permanent,” Pease added in a statement. “America’s small craft brewers are doing exactly what we said they would do with this extra capital: expanding their breweries, hiring more workers and providing current workers with better benefits.”

In an effort to highlight the effect of excise relief on small and independent breweries, the BA shared the results of a member on how the savings is being reinvested. That survey found that:

  • 73% of breweries are buying equipment, making upgrades to their tasting rooms and breweries, and moving into new buildings;
  • 53% of breweries are hiring new employees;
  • 39% are adding to employee benefits, increasing pay, offering insurance and expanding vacation time;
  • 21% are increasing charitable donations.

The BA added that more than half (58%) of the breweries surveyed had plans to do two or more of the aforementioned actions.

And should the tax cuts be made permanent this year, 86 percent of BA members surveyed said they would be more likely to invest in capital improvements or hire new workers, the trade group said.

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