Shortly after midnight the Senate passed the tax overhaul bill, 51-48. The measure, which provides significant cuts in the federal excise tax on beer, wine and spirits, will return to the House for a final vote today.
In a statement, Kraig R. Naasz, president/ceo, Distilled Spirits Council, noted the legislation reduces the federal excise tax on distilled spirits producers for the first time since the Civil War, which will enable the more than 1,300 operating distilleries nationwide to re-invest in their businesses and stimulate job growth in their communities.
“Supported by 303 cosponsors in the House and 54 cosponsors in the Senate, this landmark legislation creates a more equitable tax structure for distillers, brewers, winemakers and importers of beverage alcohol by equalizing the federal excise tax on spirits, beer and wine for the first 100,000 proof gallons. It also provides for the same in-bond treatment of spirits transferred in bottles as for beer and wine and exempts the spirits aging process from interest expense capitalization rules,” Naasz said, adding:
“We look forward to working with the U.S. Department of Treasury’s Tax and Trade Bureau to implement these important tax provisions as soon as the President signs this legislation into law.”
Distillers would see the first 100,000 gallons of distilled spirits taxed at $2.70 per gallon. For production above 100,000 gallons, the rate would be $13.34 a gallon.
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 limits would still be taxed at $18 per barrel.
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.
Sen. Orrin Hatch (R-Utah), chairman of the Senate Finance Committee, in a statement said the comprehensive tax reform bill will give the typical family of four earning the median family income of $73,000 a tax cut of more than $2,000.
“With this legislation, we maintained our commitment to creating a tax code that is based in simplicity and fairness. We’re lowering rates across the board for the American people. We’re ensuring businesses, both small and large, can better compete and bring more jobs and investment back home,” he said, adding:
“And, we’re remaking the tax code in way that will allow more individuals and families invest in their future. We should all be proud of this historic moment, which puts us a stone’s throw away from helping hardworking Americans get bigger paychecks, better jobs and fairer taxes.”