Like two guys at a bar who started off fighting but are best buddies by closing time, two beer industry trade groups that had previously been at odds announced Thursday that they were backing a compromise House bill to reform federal excise taxes for golden, sudsy beverages.
In a joint announcement, the Beer Institute, which represents larger brewers including several importers, and the Small Brew Association, which represents the increasingly popular craft brewing industry, announced they were uniting in support of Craft Beverage Modernization and Tax Reform Act, a bill that would lower taxes on both smaller brewers and large ones, including beer importers.
Bob Pease, president of the association, said that while the two groups were often “adversarial” on tax legislation, they had often worked together on other beer-related bills. He credited Sen. Ron Wyden, D-Ore., with forging the underlying basis for a tax proposal both groups could stomach and that other lawmakers might back. Wyden’s Senate version was introduced earlier this month.
“So far, with the 114th Congress, I am optimistic. They are definitely getting more done in this Congress than in previous ones,” Pease said.
The two groups have long argued that the tax structure for breweries was in need of reform, but until recently agreed on little else tax-wise. The institution had pushed for legislation that would have reduced taxes overall but also would have eliminated the advantages enjoyed by small- to medium-sized brewers. The association opposed that, pushing instead for rates that would have lowered the burden for their members and, to a lesser extent, that of larger brewers, but froze out importers.
Currently, the excise tax is a flat $18 a barrel, but those who brew less than two million barrels annually only pay $7 on their first 60,000 barrels. The new joint proposal would halve the rate on those first 60,000 barrels to $3.50 while retaining the two-million barrel cutoff.
The legislation also would reduce the excise tax on the first six million barrels to $16 regardless of the brewer’s size. Importers also would be eligible for this rate. Any production beyond six million would pay the current rate of $18.
The proposal is largely the same as one backed earlier this year by the Small Brew Association called the Small Brew Act, except that version limited the $16 rate to the first two million barrels and required importers to pay a flat $18 rate for all production. Pease said his group agreed to back extending the lower rates to importers in exchange for raising the cut-off for the $16 rate to six million, which benefits the larger craft brewing businesses.
“It gives a little something to everyone. It’s got elements of the Small Brew Act, which we’re happy with, and it’s got elements of the [institute-supported] Fair Beer Act in there,” Pease said.
The feeling was mutual, said Paul Cummins, spokesman for the Beer Institute. “We’re thrilled to be partnering and working with the Brewers Association in the hopes of addressing this regressive tax once and for all. Tax reform for Americas brewers has support in Congress and we’re hopeful they’ll be able to take action on this issue as soon as possible,” he said.
The institute had previously pushed for much lower rates, endorsing a proposal last year that would have capped taxes at $9 per barrel for all production above 60,000 barrels.
The legislation has bipartisan support. The House co-authors are Reps. Erik Paulsen, R-Minn. and Ron Kind, D-Wis. Other co-sponsors include Reps. Earl Blumenauer, D-Ore.; Peter DeFazio, D-Ore.; Lynn Jenkins, R-Kan.; Richard Neal, D-Mass.; Pat Tiberi, R-Ohio; and Steve Womack, R-Ark.
Wyden is sponsoring the Senate version.
