Graduated Excise Tax Reduction Legislation Introduced

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H.R. 4278

  • The Brewers Association supports H.R. 4278, a bill to create a graduated beer excise tax rate of $3.50 and $16 for America’s small brewers, sponsored by U.S. Representatives Richard Neal (D-Massachusetts 2nd District) and Kevin Brady (R-Texas 8th District).
  • Reducing the excise tax is the top legislative priority for BA members. Earlier this year, Representative Neal sought input from the Brewers Association on his proposal to reduce the excise rate paid by small brewers and we offered our help.
  • The Brewers Association’s support for H.R. 4278 does not affect our support for H.R. 836. The Brewers Association continues to support H.R. 836 and Senate companion bill S. 1058.
  • During the 111th Congress, 241 US Representatives have shown their support for small brewers by joining Representatives Pomeroy and Latham in sponsoring legislation to reduce both of the beer excise tax rates paid by small brewers (H.R. 836, the Brewers Excise and Economic Relief Act of 2009). We strongly encourage Members of Congress to extend the same level of bi-partisan support to H.R. 4278, as introduced by Representatives Neal and Brady.

Explanation of H.R. 4278

  • Currently, a small brewer that produces less than 2 million barrels of beer per year is eligible to pay $7.00 per barrel on the first 60,000 barrels produced each year.  Reducing this rate to $3.50 per barrel would provide approximately $15.5 million per year to help strengthen our nation’s smallest brewers and support their efforts to maintain and generate jobs.
  • Once production exceeds 60,000 barrels, a small brewer must pay the same $18 per barrel excise tax rate that the largest brewer pays at over 100 million barrels. Lowering the tax rate to $16 per barrel on beer production above 60,000 barrels up to 2 million barrels would provide small brewers with an additional $26.2 million per year that would be used to support significant long-term investments and create jobs by growing their businesses on a regional or national scale.
  • The small brewer tax rate was established in 1976 and has never been updated. Since then the annual production of America’s largest brewery increased from about 45 million to 107 million barrels. The ceiling defining small breweries is 2 million barrels. We support raising this ceiling to 6 million barrels to more accurately reflect the intent of the original differentiation between large and small brewers in the US.

Read Congressman Neal’s statement on the floor of the U.S. House of Representatives (PDF file).

Along with Congressman Brady, original cosponsors include Congressmen Peter DeFazio (OR) and Denny Rehberg (MT), co-chairs of the House Small Brewers Caucus, Earl Blumenauer (OR), Wally Herger (CA), Charles Dent (PA) and Stephen Lynch (MA).

More information regarding the details of the bill and how Brewers Association brewery, allied trade and American Homebrewers Association members can help support the effort to pass H.R. 4278 will be available early in 2010.

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