Reps. Kind, Kelly Lead Bipartisan Push to Protect Craft Brewers from Devastating Tax Hike, Keep Their Doors Open
Today, Reps. Ron Kind (D-WI) and Mike Kelly (R-PA) led 125 of their colleagues in a bipartisan letter urging Speaker Pelosi and Minority Leader McCarthy to pass the Craft Beverage Modernization and Tax Reform Act. This legislation, introduced by Reps. Kind and Kelly, is critical to preventing America’s brewers, cider-makers, distillers, and vintners from facing a significant increase in their federal excise taxes at a time when so many are struggling just to stay afloat.
Lower rates for brewers and craft beverage manufacturers were initially passed on a temporary basis. If the Craft Beverage Modernization and Tax Reform Act is not enacted, or if relief is allowed to expire, taxes will return to higher levels come January 1, 2021. The COVID-19 crisis has already created economic duress for many producers across the country as tasting rooms, bars, and restaurants have shut down. Now, without Congressional action, producers are facing a second looming crisis in the form of increased federal excise taxes.
“Craft breweries are not only a large part of Wisconsin’s culture, they are also an economic engine--supporting local economies and creating job opportunities,” said Rep. Ron Kind. “Due to the COVID-19 crisis, so many of our craft breweries are facing serious economic struggles through no fault of their own. For many of these businesses, this tax increase could be the final straw. We need to act now to extend this critical economic lifeline to brewers and provide much needed relief.”
“Across this country, craft brewers, distillers, vintners, and cider makers are struggling to keep their doors open. These businesses are having to make the difficult decision to stop production, furlough employees and close tasting rooms because of the pandemic. Adding to those problems, tax rates are set to expire on December 31st. We must act. It is critical that the Craft Beverage Modernization and Tax Reform Act be included in the end of the year legislative package. Allowing the current excise tax rates to lapse would force many of these businesses to close permanently,” said Rep. Mike Kelly.
“The Craft Beverage Modernization and Tax Reform Act was important to brewers, and after the impacts from COVID-19, it’s imperative,” said Dick Leinenkugel. “We have seen first-hand a dramatic decline in visitors to our Leinie Lodge in Chippewa Falls and lost sales from the closures of bars, restaurants, stadiums, and more. And while we will be able to get through this, there are hundreds of others brewers that have no chance of surviving without this legislation and the state’s economy will suffer further.”
“We are a small brewery that has grown from two employees and 300 BBLS in year one to 11,000 BBLS fifteen full time employees and twenty part time employees at year five. Because of the excise tax recalibration we have been able to reallocate those monies towards capital improvements like a new process chiller made in Washington State and our canning line which was made in Ohio. By adding these pieces of equipment we were able to increase our production and hire a full time packaging team consisting of four salaried employees with benefits. Without the tax reduction we would not have been able to grow at the pace we have been for the last few years. In addition, 2020 has been very difficult to plan due to COVID-19. Having a lower tax burden has also helped us to keep our entire staff employed while we lost time and revenues pivoting towards a business model that is now 100% off premise,” said William Glass, the Brewing Projekt President.
“Since enactment of the federal excise tax recalibration in 2017, Wisconsin’s small and independent craft brewers have been able to re-invest additional capital into their businesses and add more brewing jobs in every corner of our state. Wisconsin is also home to many of the equipment and ingredient suppliers that are utilized by craft breweries nationwide and the impact of making the current FET rates permanent will help us to maintain and grow the $2 billion economic impact that craft breweries have in our state. At a time when the coronavirus pandemic has had a punishing effect on small businesses in the entire hospitality sector which includes small breweries, a 100% increase in federal excise tax rates would compound the economic uncertainty that we are experiencing during these challenging times. We appreciate Congressman Kind’s leadership on this issue and we are encouraged by the broad bipartisan support in Congress for moving CBMTRA forward,” said the Wisconsin Brewers Guild.
The Craft Beverage Modernization and Tax Reform Act reduces excise taxes, compliance burdens, and regulations for the 5,300 breweries, 8,000 wineries, and 800 distilleries across the country. In addition to creating jobs in every state and Congressional district, beverage alcohol producers are critical partners to our farmers and agriculture producers, the tourism industry, the manufacturing sector, and the hospitality industry, including restaurants, bars, and other on-premise establishments.
Read the letter here.