Small BREW Act Introduced in House and Senate

Share Post

Here are your bill numbers for the Small BREW Act: H.R. 232 and S. 375. The full title of the Small BREW Act is the Small Brewer Reinvestment and Expanding Workforce Act.

The Brewers Association recognizes and thanks Senators Ben Cardin of Maryland and Susan Collins of Maine for their leadership in the introduction of the Small Brewer Reinvestment and Expanding Workforce Act (Small BREW Act) in the U.S. Senate. Representatives Erik Paulsen of Minnesota and Richard Neal of Massachusetts are the lead sponsors in the House, and we recognize and thank them for that leadership.

The Small BREW Act would halve the federal excise tax for small brewers who produce 60,000 or fewer barrels of beer per year. Small brewers who pay the $18 per year rate for barrels 60,001 to 2 million would see a reduction on the rate for those barrels from $18 to $16 per for those barrels. Domestic brewers 6 million barrels or less per year would qualify for the new rate if it becomes law.

The Brewers Association is coordinating member visits during SAVOR week in June  to engage key members of Congress and ask for their support for the Small BREW Act.

In an effort to block the Small BREW Act, the Beer Institute (the organization that represents the large brewers and two main beer importers) coordinated the introduction of the BEER Act. The BEER Act would give benefits to all brewers and importers that supply beer in the U.S. The biggest beneficiaries on a per barrel basis with this bill would be small, foreign brewers/importers who would see their excise tax go from $18 per barrel to a rate that could be as low as $0 for the smallest companies.

The Brewers Association released a press statement criticizing the BEER Act for four reasons:

  • Jobs. The large brewers have lowered U.S. employment by 6,000 jobs since 2008 while reaping record profits and paying lower taxes than domestic brewers. In contrast, small, Main Street American brewers have created over 110,000 jobs in the last 35 years. Dr. John Friedman, formerly of Harvard University and now with Brown University, projects that when passed, the Small BREW Act will create more than 5,200 jobs in the first 12 to 18 months after passage.
  • Cost. The Small BREW Act costs $64 million annually while the BEER Act costs $150 million annually and $1.5 billion over 10 years. The majority of additional annual costs associated with the BEER Act, $86 million, comes from tax breaks to foreign-based breweries and multinational breweries that have cut thousands of U.S. jobs in the past six-plus years and export and shelter their U.S. profits.
  • Fairness. The large, multinational brewing companies currently pay lower effective tax rates than small U.S. brewers due to global tax reduction mechanisms, so the BEER Act gives further tax advantages to companies that already pay lower rates than purely domestic brewers.
  • Chance of passage. If the past is a lesson, the purpose of the Beer Act is not passage, but to be a strictly defensive bill designed to fend off a tax increase for large brewers. Due to its increased cost, its tax cuts for large, multinational firms, and its higher cost per job created, the BEER Act may be impossible to pass. There are hundreds of requests for industry tax relief proposed to Congress every year; only the most politically attractive few have a chance of passage. The Small BREW Act, due to its job creation and focus on America’s brewers, has made it into that small group of politically attractive tax bills. Adding a big tax cut for large multinational brewers may mean we become just another industry looking for tax relief. Notably, the Small BREW Act earned the support of 182 U.S. Representatives and 47 U.S. Senators in the previous Congress and, thanks to the grassroots efforts of small brewers, has a real chance of passage. The BEER Act weakens the American jobs element and will face additional resistance in this era of budget austerity.

In summary the Small BREW Act is superior to the BEER Act because of jobs, cost, fairness and chance of passage. We strongly encourage Brewers Association members to contact Bob Pease at the Brewers Association and their members of Congress to show their support for the Small BREW Act.

Paul Gatza

February 19, 2015