Let’s continue supporting our American craft brewers

For the past decade, one of the fastest-growing sectors of the U.S. economy has been the craft beverage industry. Across the country, in cities and small towns alike, American entrepreneurs have set up successful small businesses producing small-batch beer, wine, and spirits. A few decades ago, the craft beverage industry was in its infancy. By 2018, the craft beverage industry supported more than 5.4 million jobs across the country, and generated more than $562 billion in economic activity nationwide. I’ve seen this firsthand in my home state of Ohio, which now hosts the sixth-largest craft beer industry in the country with more than 350 brewery operations, and 81,000 good-paying jobs.

We want the craft beverage industry to continue to grow and thrive. That’s why I was I was proud to include legislation called the Craft Beverage Modernization and Tax Reform Act as part of Congress’s 2017 tax reforms. This bipartisan tax proposal provided needed excise tax relief on production of craft beverage for two years, allowing producers to invest in workers and equipment.

Almost immediately, we saw these tax incentives make a big difference. When I’ve spoken to Ohio craft breweries and distillers like Wolf’s Ridge Brewing in Columbus, and Brain Brew Custom Whiskey in Newtown, Ohio, they’ve told me about how they’ve used the savings from these excise tax incentives to expand their operations, hire new workers, increase wages, and grow their markets.

In December 2019, I successfully worked to extend this tax relief for another year so that there could continue to be new jobs and increased investment in Ohio and other states.

As we approach the end of 2020, the benefits of the Craft Beverage Modernization and Tax Reform Act are once again set to expire, meaning that craft breweries, vintners, and distillers could face up to a 500 percent excise tax increase on Jan. 1. Because excise taxes are paid quarterly and cannot be changed retroactively, unlike income tax, it would be unfair to producers to have significant taxes due right after the beginning of the new year. This could not come at a worse time for brew pubs and other craft beverage retail operations that have been hit hard by the COVID-19 economic shutdown.

During the pandemic, “stay-at-home” orders and mandatory social distancing measures have kept customers out of brewery taprooms and wine bars and negatively impacted sales to other hard-hit sectors, like the hospitality and tourism industries. For the wine industry, projections show that on-site wine sales in 2020 will be only about half of what was sold in 2019. In August, the Distilled Spirits Council of the United States estimated that distilled spirit sales were down 41 percent compared to the same time last year.

While many brewers have stayed open through reduced operations and curbside pickup, many of these local businesses are barely holding on and will be forced to close their doors permanently should they be hit with these scheduled tax increases.

Now is the time for Congress to work on a bipartisan basis to help keep this entrepreneurial industry afloat as they work to recover from this crisis. While the Trump administration delayed the collection of excise taxes by a few months in the early days of this pandemic, we need a legislative solution to make these tax incentives permanent so that the craft beverage industry has the certainty it needs and can focus on keeping the doors open and their employees on payroll, rather than paying substantially higher taxes during an economic crisis.

Fortunately, we have bipartisan legislation that would continue the excise tax relief, and the majority of senators have co-sponsored it. I am leading a bipartisan letter to Senate leadership urging them to include it in the next urgent coronavirus response package so we can quickly pass this critical, widely-supported legislation. The craft beverage industry, which for years has defined small business success in Ohio and across the country, should not be unfairly punished with tax increases as they work to navigate the unprecedented challenges of the coronavirus pandemic.

This is just one of the many important tax provisions that Congress must work to extend before the end of the year. We need to ensure that the tax reforms that helped our economy grow to be the strongest in the world do not expire as we work to get back on track. I’m hopeful Congress will act quickly to make this important craft beverage tax relief permanent so that Ohio’s craft beverage industry has the resources it needs to stay on its feet and respond to the greatest health crisis of our time.

Portman is a member of the Senate Finance Committee.

Tags Coronavirus craft beer excise tax
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