January 13, 2015
To begin the new year and its new session, Congress showed that it still knows how to reach across the aisle when it comes to something that really matters. We’re referring, of course, to beer.
Representatives Erik Paulsen (R-Minn.) and Richard E. Neal (D-Mass.) reintroduced the Small Brewer Reinvestment and Expanding Workforce Act (Small BREW Act), sponsored by the Brewers Association, in the House of Representatives. The Senate companion bill is expected soon. The goal of the Small BREW Act is to change the federal beer excise tax that small brewers pay on each barrel of beer they produce.
Under current federal law, brewers making less than 2 million barrels annually pay $7 per barrel on the first 60,000 barrels they produce, and $18 per barrel on every barrel thereafter. The Small BREW Act, however, seeks to establish a new rate structure that will keep up with the changing craft brewing industry. If enacted, Brewers with an annual production of 6 million barrels or less would qualify for these tax rates. Under the Small BREW Act, the rate for the smallest brewers and brewpubs would be $3.50 on the first 60,000 barrels. For production between 60,001 and 2 million barrels, the rate would be $16.00 per barrel. For production over 2 million barrels, the federal excise tax would remain at its current rate of $18 per barrel. If enacted, this could mean big changes for small brewers, particularly those just looking to get started.
This is not the Small BREW Act’s first rodeo, however. An earlier version of the same bill was introduced in 2013 and picked up more than 182 supporters in both major parties, but died after being referred to the House Committee on Ways and Means. In fact, the 2013 attempt was the third time the Small BREW Act has been introduced to no avail. While in the past, the Act’s failure was widely blamed on lawmakers’ hesitance to cut taxes, this year, the Act will face another hurdle-strong opposition from both the Beer Institute and the National Beer Wholesalers Association, both of whom sent letters to Congress last month urging them not to sign on as co-sponsors.
We’ll keep an eye on the 2015 Small BREW Act and let you small brewers know if you can expect lower excise taxes anytime soon.