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On Friday President Donald Trump signed into law a tax extender package that includes the Craft Beverage Modernization and Tax Reform Act…And the industry couldn’t have been more relieved.
Those rates, which were recalibrated lower in 2018, were slated to increase—in most cases by 100 percent—unless Congress acted by Dec. 31.
The new law keeps in place the $3.50 per barrel federal excise tax (FET) rate on the first 60,000 barrels for domestic brewers producing fewer than 2 million barrels annually…Almost half the original $7 per barrel tax that brewers were saddled with in 2016.
Brewers producing more than 6 million barrels annually will still pay $16 per barrel on the first 6 million barrels and $18 per barrel if they produce over 6 million barrels.
Industry reaction to last Friday’s signing was immediate and understandably positive…
“The lower FET rates have been a boon to small and independent brewers located in all 50 states and nearly every congressional district,” said Bob Pease, president and CEO, Brewers Association. “These savings empowered brewers to reinvest in their businesses and resulted in an annual tax savings of more than $80 million.”
Because of the lower tax rates brewers were able to reinvest capital in their own operations, creating thousands of new jobs and improving employee benefits.
(Courtesy BrewDog)
This from the Boulder, Colorado-based Brewers Association…
“Thanks to the recalibrated rates, craft brewing jobs grew by 15,000 in 2018 to more than 150,000 nationally—the largest job increase on record for small brewers. By extending the language another year, congressional leaders acknowledged the profound impact the reduced excise tax rate has had on the growth and trajectory of a uniquely American industry.”
“The savings resulting from the adjusted FET rates have had a huge impact on the brewing industry here in Maine,” said Dan Kleban, owner and brewer, Maine Beer Company, Freeport, Maine….
“Our company was already in the midst of an expansion when this bill passed, and the savings allowed us to reinvest in the business, our employees, and the environment.”
“Growth in Maine’s brewing industry has helped boost other economies throughout the state; creating new agricultural opportunities, helping increase tourism, and even shaping beer science programs in our local colleges. In uncertain financial times, these savings help create a stronger economic future here in Maine.”
“Cape May Brewing Company is a small, family-owned business, and with the extension of the federal excise tax rates, we expect to save over $100,000 next year,” said Ryan Krill, co-founder and CEO, Cape May Brewing Company, Cape May, N.J….
“Every dollar we make is reinvested into our brewery. As we intend to increase production by nearly 30 percent next year, this money could be used to create a number of well-paying jobs in the county with the highest unemployment rate in New Jersey.”
“We are so thankful that Congress has extended the current federal excise tax rates for another year,” said Ryan Wibby, president and brewmaster, Wibby Brewing, Longmont, Colorado….
“When preparing the 2020 budget, I was struggling to find the capital needed for the expansion of our growing brewery. The extension of the FET rates will free up $20,000, which will allow us to purchase the production equipment necessary to meet our projections and achieve our goals.”
But while this one year extention providing 12 months of relief was welcome, the Brewers Association will continue to work with congress in 2020 to pass Craft Beverage Modernization and Tax Reform Act legislation that would make the rates permanent.
