Nearly 10,000 craft distiller employees will lose their jobs if the Craft Beverage Modernization and Tax Reform Act (CBMTRA) isn’t passed. Failure to renew the lower tax rates included in the measue will also result in a 40% reduction in U.S. craft spirits production.
That’s according to the American Craft Spirits Association (ACSA), which urged Congress to pass the Craft Beverage Modernization and Tax Reform Act (CBMTRA)before it expires Dec. 31, 2020. This permanent or temporary FET relief would prevent a 400% tax increase for all craft distillers, who are already struggling to recover from the devastating and ongoing impact of COVID-19. If Congress takes no action, FET will revert to $13.50 per proof gallon, as opposed to the current, temporary rate of $2.70, come January 1, 2021.
Despite the fact that 85% percent of ACSA’s surveyed distilleries produced hand sanitizer in an effort to support their communities in crisis, the impact of an FET increase amplifies the burden distilleries are already facing as a result of COVID-19. The pandemic forced most producers to fully close or dramatically reduce capacity of their tasting rooms (typically the largest sources of revenue for these capital-intensive businesses) and nearly eliminated sales from bars and restaurants. According to a November ACSA member survey:
- Nearly80 percent of craft distillers have eliminated jobs or cut staff hours as a direct result of COVID-19.
- Nearly half of craft distilleries have cut production (48%).
- 50 percent of distilleries have reduced their ingredient and supply purchases, creating a direct impact on the peripheral industries supported by distilling.