New tax reform act gets both beer associations on board

Nothing displeases us more than interrupting our regularly scheduled fun and informative beer content (just humor me) to talk politics, but the introduction of the Craft Beverage Modernization and Tax Reform Act (S.1562) by Sen. Ron Wyden (D-Ore.) leaves us no choice. But that’s OK because this could be one of those rare moments of compromise for the entire beer industry.

What is the Craft Beverage Modernization and Tax Reform Act?

It is the latest attempt to cut taxes and modernize regulations for craft brewers, cider makers, vintners and distillers. If you need a refresher on the previous attempts, go here: The BEER Act vs. the Small BREW Act: What’s the difference?

Wyden says his legislation builds on a consensus reached among multiple industry groups. And it builds on a number of popular proposals including the Small BREW Act sponsored by Senators Ben Cardin (D-Md.) and Susan Collins (R-Maine); the Fair BEER Act sponsored by Senators Roy Blunt (R-Mo.) and Tammy Baldwin (D-Wisc.); the Distillery Excise Tax Reform Act sponsored by Senator Gary Peters (D-Mich.); the CIDER Act sponsored by Senator Charles Schumer (D-N.Y.); the AGED Spirits Act sponsored by Senate Majority Leader Mitch McConnell (R-Ky.); and the Craft Beverage Bond Simplification Act, which was approved by the Finance Committee earlier this year. In addition, Wyden’s legislation includes a variety of new proposals to reduce tax and regulatory burdens for each industry.

In addition to providing tax relief for Oregon’s brewers, cider makers, vintners and distillers, this legislation would also reduce compliance burdens for craft beverage producers by exempting nearly 90 percent of all industry members from complex bonding and bi-weekly tax filing requirements. The bill would exempt aged beers, ciders, wines and spirits from complicated and burdensome accounting rules. It would reform rules on brewers to encourage more collaboration and streamline regulations. And it would equalize the playing field for all distilled spirits producers. Finally, this bill would cut administrative backlogs by ensuring the Alcohol and Tobacco Tax and Trade Bureau, which is charged with regulating these industries, is sufficiently funded. Additional enforcement funding and authority would help offset the cost of this bill by cracking down on tax cheats.

What are the associations saying?

Where there is new proposed beer legislation, there usually will be dueling statements from the Brewers Association (BA) and the Beer Institute — the BA typically takes up the flag just for small and independent brewers while the Beer Institute takes the Big Beer stance into account. So, the fact that both associations are in agreement here should tell you something about this proposed legislation.

First up, Bob Pease, CEO of the Brewers Association:

“Not only would this legislation recalibrate excise taxes — an issue for which we have long advocated — it would ease a number of burdens for brewers, including simplifying label approvals and repealing unnecessary inventory restrictions. This comprehensive legislation, if enacted, will achieve the job creation and brewing capacity reinvestment goals of the Small BREW Act.

“This legislative introduction is possible due to the efforts of craft brewers in support of the Small BREW Act. Brewers and state guild leaders continue to build relationships with members of Congress who are listening to their needs. With their visits, e-mails and phone calls, small brewers have moved one step closer to excise tax relief.”

Next up, the Beer Institute:

The Beer Institute has been working to find common ground to unite the brewing industry behind one federal excise tax relief bill. The Wyden proposal accomplishes that.

Notably, the Wyden proposal:

· Reduces the federal excise tax to $3.50 per barrel on the first 60,000 barrels for domestic brewers producing fewer than 2 million barrels annually.

· Reduces the federal excise tax to $16 per barrel on the first 6 million barrels for all other brewers and all beer importers.

· Keeps the excise tax at the current $18 per barrel rate for barrelage over 6 million.

“We applaud Senator Wyden for this positive step forward in addressing beer excise tax reform in a fair, equitable and comprehensive way,” said Jim McGreevy, president and CEO of the Beer Institute. “The beer-specific provisions of this bill move the ball forward for brewers of all sizes. We know that when all facets of the industry agree, we are stronger together.”

Like the Fair BEER Act, which is supported by the Beer Institute, the National Beer Wholesalers Association [NBWA] and others, this legislation takes a comprehensive approach to reform and includes all types of brewers and beer importers. The Fair BEER Act was introduced in February with bipartisan, bicameral support.

So, there you have it. Whether or not this bill will gain any traction (unlike the other two) remains to be seen, but at least we have achieved a nice middle ground for the moment. We’ve got to believe that having everyone on board certainly helps the cause.