When a two-year provision featuring language from the Craft Beverage Modernization Tax Reform Act (CBMTRA) passed at the end of 2017, it was a long time coming. Years of advocacy efforts and bipartisan teamwork led to its enaction on Jan. 1, 2018. Since then, industries across the beverage alcohol sector have realized savings enabling them to be more successful businesses and more productive contributors to their local communities as well as the greater American economy.
But, at the end of this year, we risk federal excise tax returning to pre-2018 rates if CBMTRA is not extended and made permanent.
As one of the very first legislative actions this year, Sens. Ron WydenRonald (Ron) Lee WydenSanders, 50 Democrats unveil bill to send N95 masks to all Americans Manchin told White House he would back version of billionaire tax: report Democrats look to scale back Biden bill to get it passed MORE (D-OR) and Roy BluntRoy Dean BluntJohnson, Thune signal GOP's rising confidence Senate Minority Whip Thune, close McConnell ally, to run for reelection The end of orphanages starts with family strengthening programs MORE (R-Mo.), along with Reps. Mike KellyGeorge (Mike) Joseph KellyPelosi faces pushback over stock trade defense Nunes resignation sets off GOP scramble on Ways and Means DeGette calls for 'lean and mean' health research agency to tackle diabetes MORE (R-Pa.) and Ron KindRonald (Ron) James KindDemocrats confront rising retirements as difficult year ends Members of Congress not running for reelection in 2022 Democrats brace for flood of retirements after Virginia rout MORE (D-Wis.), reintroduced the CMBTRA in both chambers. We applaud their leadership in making this legislation a priority and are grateful to the 99 members of the House and 44 senators who have already signed on as co-sponsors. But our work here is not done – this bill must be passed, and these provisions made permanent.
Federal excise tax recalibration has been vital in an increasingly competitive market. Ninety-five percent of U.S. breweries are very small with anywhere from just five to fifty employees. The additional capital that has come as a result of the CBMTRA adds up to $80 million a year. That’s $80 million dollars that has enabled small, independent brewers to more confidently invest in their businesses, buy new equipment, expand their breweries and hire additional workers bringing industry job totals to more than 150,000. These are the real and quantifiable benefits that matter.
If the CBMTRA is not made permanent at the end of this year, not only will these breweries lose this benefit, but if taxes go up in 2020, that will be a 100 percent federal excise tax increase for the roughly 2,000 new small brewers that came to market after enaction and who have never experienced the higher rates. At least one business in every congressional district in the country will be negatively impacted if the current rates expire.
Further, from Main Street to Wall Street certainty is required to properly plan investments. If the recalibrated rates are not made permanent, certainty for many brewers and small businesses across America will be lost and, along with it, the ability to confidently grow their businesses, make larger investments, hire more workers, and generally plan for the future. This certainty is critical to long-term success.
In a few weeks, our members will travel to Washington to meet with lawmakers, many of whom are new to Congress. We have more than 7,200 individual stories to share, showcasing just how important this legislation is to local communities.
It goes without saying that any tax legislation faces an uphill battle. But, we are optimistic. CBMTRA has already been enacted into law and members of Congress have seen the importance of the legislation. Our story today is one of job creation and economic growth. Our congressional champions are passionate about the small breweries in their states and districts and making the federal excise tax permanent is a significant step in providing this uniquely American industry some much needed stability.
Bob Pease is the president and CEO of the Brewers Association which represents more than 5,100 U.S. brewery members. The Brewers Association is dedicated promoting and protecting small and independent American brewers, their beers and the community of brewing enthusiasts.