As we went to press, the House was in the midst of a four-hour debate on the Republican tax bill. Meanwhile, across the Capitol in the Senate, Sen. Rob Portman (R-Ohio) succeeded in inserting the “CRAFT beverage modernization” provision, which would lover the tax rate on beer to $16 per barrel on the first six million barrels brewed and lower it to $3.50 per barrel for small brewers on the first 60,000 barrels produced domestically.
The measure would also reduce federal excise taxes on spirits by:
P Establishing a reduced rate of $2.70 per proof gallon for the first 100,000 proof gallons of distilled spirits produced or imported annually for spirits.
PEstablishing a rate of $13.34 per proof gallon for the next 22,130,000 proof gallons of distilled spirits.
P Keeping the excise tax rate of $13.50 per proof gallon for production in excess of 22,230,000 proof gallons.
These rates would apply to both domestic producers and importers of distilled spirits, regardless of size, and would mark the first time that taxes on distilled spirits were reduced since the Civil War.
The craft distilling industry is growing, with, on average, one distillery opening per day. There are craft spirits distilleries operating in the U.S. in all 50 states, employing close to 20,000 people. Investments in the industry in the last decade have now reached over $600 million, according to the Craft Spirits Data Project (2017).
“The resurgence of craft distilling over the last fifteen or so years has been tremendous, and fair tax treatment will ensure we have opportunity to compete, not just in our local communities, but in the global market as well,” said Mark Shilling, President, American Craft Spirits Association. “In a competitive global economy, we are an industry that is proudly bringing manufacturing back to America, creating jobs, growing tourism, supporting local farmers and other small businesses, and Federal Excise Tax reduction is paramount to continuing to allow us to do just that.”
Margie A.S. Lehrman, Executive Director of ACSA, added, “The burdensome Federal Excise Tax is a substantial impediment to economic growth in the craft spirits industry, but this bipartisan commitment to ‘fixing’ this injustice is promising. The Congress understands the reinvestment opportunities, allowing craft spirits producers the chance to expand their production capacity, add new jobs, and expand their tourism and tasting room facilities. This is a clear “win” for American economic growth.”