Lower Taxes for Small Brewers Proposed

Brookston Bulletin has a story about HR 4278 which is a bill in the House to reduce the small brewers excise tax differential as well as changing the definition and  levels for small brewers. Jay’s information is essentially the same as what is on the Brewers Association web site. Both Jay and the Brewers Association provide information about how to appeal to Congressmen to support the bill.  The Brewers Association represents 1,516 brewers which includes sixty-three brewing companies that produce  anywhere from 15,000 to 6 million barrels of beer per year. In Bev-AB brews over 100 million barrels a year domestically.

The bill is sponsored by Rep. Neal (MA). The co-sponsors include representatives from several strongholds of craft brewing including California, Washington, Oregon, Pennsylvania, and Vermont. The House also has a Small Brewers Caucus. This group has a varied membership including people in the news recently. Joe Sestak – running against Arlen Specter for a Pennsylvania Senate seat, Bart Stupak, Family member and potential health care reform destroyer and Joe Wilson of  “you lie” fame.

There are several other bills before Congress that deal with excise taxes on beer. S.1058. Brewers Excise and Economic Relief Act of 2009, seeks to roll back the $18 per barrel excise tax to its 1991 rate of $9 and provide further tax rate reductions for small brewers.

Since 1991, the brewing industry, particularly large brewers, has tried to roll back the tax. The Brewers Association supports this, but HR 4278 appears to be an attempt to place small brewers front and center. Since the efforts of A-B in 1991 were the main reason the rate was not higher, it may be short sighted for small brewers to set out on their own.

The small brewers’ differential tax rate dates from 1976 when there were fifty-three brewers and thirty-nine brewed less than 2 million barrels.  It was the culmination of many years of effort on the part of small and regional brewers and was the last time the whole brewing industry cooperated for many years.

The Brewers Association is arguing for tax reduction by focusing on job creation, but I still think that any effort to reduce excise taxes for beer is likely to fail. Although the government is seeking to create jobs, it is also facing huge deficits. Liquor and tobacco taxes have been a mainstay of the federal governments’ internal revenue for almost 150 years. It seems unlikely that they would not want to continues to rely on a proven source of revenue during troubled economic times.

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