It’s almost certain to be a one-year extension of the present rates, not a permanent fix, we’re told. But an extension would be welcomed by almost everyone, especially craft distillers who are facing a 400% increase in the rate for excise tax payments to Alcohol & Tobacco Tax & Trade Bureau. The first payment at the higher rate would be due Jan. 15.
Action may come before year-end. The Federal Government is currently operating on a continuing resolution which expires next Friday, Dec. 20. House Ways & Means and Senate Finance committees are currently working to do a full appropriations bill. They may not be able to get a full omnibus bill, but lobbyists we talked to tell us they are hopeful for something that would fund at least some parts of the government.
At first blush, it’s almost inconceivable that the Craft Beverage Modernization bill wouldn’t get attached to something. In the Senate, 74% of Senators are cosponsors. In the House the number is 327. With roughly 75% of both houses listed as sponsors, “our challenge is more of a process challenge,” Charles Jefferson, vp-federal and international public policy for Wine Institute told us.
One factor improving the odds a bill will be enacted before year-end is the signing of an agreement on the U.S.-Mexico-Canada trade deal. Ways & Means and Senate Finance have been focused on the trade pact. With that apparently taken care of, next up is the government funding bill which is most likely to be the vehicle to extend the craft beverage tax measure.
Obtaining that extension has been “an all-out effort for us,” Kelly Paulsen, vp-federal government relations, Distilled Spirits Council of the U.S., said. That sentiment was echoed by Jefferson and Jim McGreevey, president, Beer Institute.
Paulsen describes the extension as “completely vital” for craft distillers, who have told how they have used the tax savings for hiring, doubling (or more) their production, new benefits for employees and new facilities.
“Small businesses don’t want to cut employees or production,” she said. In more than 300 meetings on Capitol Hill, beginning in July, craft distillers and DISCUS and American Craft Spirits Association professionals have stressed the alcohol beverage industry is different: “We pay taxes every two weeks.”
McGreevey described himself as “hopeful and confident the relief will be extended by Dec. 31. The rhythm of the legislative process is working in our favor.”
When we spoke with McGreevey, he said the discussion has been focused on extending the bill. After the extension becomes law, he suggested, it will be time to focus on making it permanent. To that thought, craft brewers, distillers and vintners can only say, “Cheers!”