Strengthen Small Businesses and Preserve American Jobs
The following talking points and resources for were developed for brewers to use to help educate members of Congress and staff about small and independent brewers, their unique contributions and challenges, and to make the case to support making the federal excise tax recalibration legislation that passed in the 115th Congress permanent.
Legislation in the 116th Congress
In the 115th Congress, language from the legislation known as the Craft Beverage Modernization and Tax Reform Act (CBMTRA) of 2017 (H.R. 747 and S. 236) was included in H.R 1, the Tax Cut and Jobs Act. It recalibrated the federal excise tax for breweries, wineries, and distilleries from Jan. 1, 2018 to Dec. 31, 2019. The Brewers Association supports legislation that would keep the federal excise taxes on breweries from increasing from the current rate.
In February of 2019, CBMTRA (H.R. 1175 and S. 362) was reintroduced with strong bipartisan support in the House and Senate. The CMBTRA is a broad piece of tax legislation that impacts not just the beer industry, but also wine and distilled spirits. With regard to beer, the bill restructures the federal excise tax, modernizes the Alcohol Tax and Trade Bureau (TTB) labeling requirements, and changes certain restrictions on transferring beer between bonded facilities.
Here are the facts:
|Since Jan. 1, 2018 a small brewer that produces less than 2 million barrels of beer per year is eligible to pay $3.50 per barrel on the first 60,000 barrels produced each year. This rate expires on December 31, 2019.||Proposed legislation would make permanent the $3.50 per barrel rate and would provide approximately $49 million per year (based on 2017 data) 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 $16 per barrel excise tax rate that the largest brewer pays at 90 million barrels. This rate expires on Dec. 31, 2019.||Permanently making the tax rate $16 per barrel on beer production above 60,000 barrels up to 6 million barrels would provide small brewers with an additional $30.3 million per year (based on 2017 data) that would allow small and independent brewers to make significant long-term investments and continue to create jobs by growing their businesses on a regional or national scale. Foreign based breweries would also benefit from this reduction.|
In addition, making the langue in the Craft Beverage Modernization and Tax Reform Act permanent would:
- Allow for consolidated bookkeeping for brew pubs.
- Expand the list of ingredients that could be automatically included in a beer without approval from the Alcohol and Tobacco Tax and Trade Bureau (TTB).
- Allow brewers to collaborate on new beers by giving them the flexibility to transfer beer between breweries without tax liability.
The Brewers Association seeks to promote and protect small, independent American brewers, their craft beers and the community of brewing enthusiasts. The Brewers Association represents over 7,100 small and independent brewers across the nation.
America’s small and independent brewers include over 200 breweries that produce between 15,000 and 6 million barrels of beer per year, more than 4,300 microbreweries that produce less than 15,000 barrels per year and more than 2,500 brewpubs (brewery restaurants) that sell 25 percent or more of their beer on site.
Nationally, small and independent brewers employ over 135,000 full- and part-time employees and generate more than $3 billion in wages and benefits and pay more than $2.3 billion in business, personal, and consumption taxes. These brewers are vital small businesses in communities across the country, typically employing 10 to 100 employees.
Consumer demand for the bold and innovative beers brewed by America’s small brewers has grown significantly in recent years. But beer produced by small, independent brewers still represents only 12 percent of the beer sold nationwide. As small businesses, small brewers face many economic challenges. Because of differences in economies of scale, small brewers have higher costs for production, raw materials, packaging and market entry than larger, well-established multinational competitors. Furthermore, efforts to increase state taxes for all brewers continue to threaten jobs and their economic stability.