No surprise: The House of Representatives, as expected, passed the Republican’s tax reform bill. It will create new winners and losers, but one thing is certain: For at least two years, bev/al producers will benefit from reductions in the federal excise tax on beer, wine and spirits — assuming the bill actually becomes law.
The Senate is expected to pass the measure later today. Then, tomorrow, the House is likely to vote on the measure again because the House version violates some Senate rules.
Beer is currently taxed at $18 a barrel, and smaller brewers are taxed at a reduced rate of $7 for the first 60,000 barrels produced. The proposal would reduce federal excise tax for smaller brewers from $7 to $3.50 per barrel on the first 60,000 barrels and anything further will be taxed at $16 per barrel.
Larger brewers would also see an excise tax cut — to $16 a barrel from $18 on the first six million barrels brewed or imported. Beer brewed or imported above the six million limit would still be taxed at $18 per barrel.
Distillers would see the first 100,000 gallons of distilled spirits taxed at $2.70 per gallon. For production abouve 100,000 gallons, the rate would be $13.34 a gallon.
Small domestic wine producers currently receive tax credits if they do not exceed 250,000 gallons, but the new proposal will lift this limitation and give credit to all wine producers, not just small companies.
Sparkling wines and mead will also be taxed at the lowest rate that ‘still wines’ are currently taxed, i.e. $1.07 per gallon of wine. The tax cuts could result in cheaper alcohol for consumers and less rigorous regulations on the drinks industry.
U.S. Chamber of Commerce President and CEO Thomas J. Donohue said the “country is on the cusp of a historic moment, one we haven’t seen in 31 years. Now, we look to the Senate to quickly pass this important legislation and deliver the competitive tax code Americans have been waiting for. As we all know, failure is not an option.”