Alcohol industry races to save tax break by year-end deadline

Alcohol industry races to save tax break by year-end deadline
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Trade groups are prepping for a year-end push to have Congress pass legislation to permanently reduce federal excise taxes for alcohol producers.

The bill has broad backing in both chambers, and supporters are confident they can get it across the finish line this year. But with Washington dominated by the impeachment drama unfolding in the House, a spending fight looming and only a handful of legislative days left, industry groups are pulling out all the stops.

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“We’re certainly anxious about the challenges coming up towards year-end with the focus on the impeachment proceedings, [and] Congress not yet coming to a path forward on a year-end spending bill,” said Chris Swonger, Distilled Spirits Council president and CEO.

“We’re working very, very hard, working with congressional leadership making sure this is top of mind, making sure we can get this passed by year’s end.”

At issue is the Craft Beverage Modernization and Tax Reform Act, which was included in the 2017 Republican tax bill but expires at the end of 2019.

The law reduced federal excise taxes for a range of alcohol producers, such as brewers, winemakers, distillers and even importers. 

But if the tax rates aren’t extended, steep tax increases will kick in on Jan. 1.

Legislation to make the cuts permanent, introduced in February by Sens. Ron WydenRonald (Ron) Lee WydenTrump trade deal likely to sow division in Democratic presidential field House GOP unveils alternative drug pricing measure ahead of Pelosi vote Pelosi gets standing ovation at Kennedy Center Honors MORE (D-Ore.) and Roy BluntRoy Dean BluntRepublicans consider skipping witnesses in Trump impeachment trial Senate braces for brawl on Trump impeachment rules Trump's legal team huddles with Senate Republicans MORE (R-Mo.), hit 73 co-sponsors in the Senate earlier this month. And companion legislation in the House, from Reps. Ron KindRonald (Ron) James KindCongressional authority in a time of Trump executive overreach Trump tax breaks for low-income neighborhoods draw scrutiny Alcohol industry races to save tax break by year-end deadline MORE (D-Wis.) and Mike KellyGeorge (Mike) Joseph KellyAlcohol industry races to save tax break by year-end deadline Democrats ramp up oversight efforts over 'opportunity zone' incentive Genetic counselors save health care dollars when involved in the testing process MORE (R-Pa.), has 318 co-sponsors.

“Reducing the tax burden on craft beverage makers has freed up more capital for them to grow and create jobs in communities across the United States,” Blunt said in a statement. 

“Permanently reducing excise taxes on brewers, distillers, and winemakers will make the industry even stronger.”

“Extending benefits for craft beverage producers, as well as other expiring tax provisions, is a top priority,” Wyden said, adding that he is “hopeful that we will come to an agreement on a year-end package.”

The bills still have not passed the relevant committees — the Senate Finance Committee, on which Wyden is the ranking member, or the House Ways and Means Committee — as lawmakers wait for the right vehicle.

Both Blunt and Wyden said they were pushing for Congress to meet deadline to pass the legislation.

Despite the broad support, groups pushing for passage are ramping up their efforts as the year draws to a close.

A broad coalition of groups, including the Beer Institute, Brewers Association, American Craft Spirits Association, Wine Institute, WineAmerica, the United States Association of Cider Makers and American Mead Makers Association, have teamed together to push the legislation.

Bob Pease, president and CEO of the Brewers Association, said that the coalition has talked to leadership as well as the Senate Finance Committee and House Ways and Means Committee about including the bill in a tax vehicle this year.

“I think everyone recognizes that appropriations measures, or a continuing resolution, must get done. So, in that sense, the traditional legislative work continues. I don’t know that these other matters really affect the ongoing legislative discussions,” Pease told The Hill.

The coalition held a coordinated “Day of Action” on Oct. 15 and engaged with congressional offices through emails, phone calls and social media to push the legislation. More than 3,000 individuals participated, urging lawmakers to act before Dec. 31.

Swonger said the groups recognize that lawmakers are dealing with other issues, primarily the impeachment fight, but wants to ensure they don’t lose focus.

“Our call to action with Congress is in recognizing how all-consuming the impeachment proceedings may be, Congress still needs to do its business, right? So there’s big politics wrapping around those issues and what Congress is considering as it relates to impeachment, but they need to get the people’s work done first and foremost,” Swonger said.

Jim McGreevy, president and CEO of the Beer Institute, is optimistic that impeachment won’t distract from the legislation.

“My view is Congress can walk and chew gum at the same time. We know that lots of conversations are happening around the tax relief and tax extenders issue,” he told The Hill. “It’s not hard to keep legislators on track about this but certainly the trade associations have been working together to keep the issue top of mind.”

The Beer Institute also had its members come to the Hill in October to meet with lawmakers and push for the legislation. And Pease said the Brewers Association has been working to tout the benefits of the legislation for the industry.

“Our real strategy is to just tell our story, which is a very positive one. Specifically, BA members are using the additional capital to hire more workers, buy new equipment, and provide current workers with better benefits. The excise tax savings are being used exactly as we predicted that they would be,” he said. 

Pease cautioned that the impact of a tax hike could be damaging to the industry.

“We are working hard to ensure that our members will not be subject to an increase in their federal excise taxes. That would be counterproductive economically.”

If the legislation doesn’t pass, large and regional beer suppliers will see their excise tax payments go up by an average of 4 percent while 99 percent of U.S. breweries will see their excise taxes double, according to data from the Beer Institute.

More than 2,000 new brewers opened after the lower federal excise tax was enacted and a tax increase would be a huge financial burden because they have never paid the higher rate.

Right after Thanksgiving, Swonger said, a final push will begin.

“We’re going to be making a full-court press to call on our friends in Congress, primarily in the leadership, to continue to stay focused on doing the people’s business,” he said.

“Not passing this legislation will have a really, really direct impact on small businesses and communities all around the country. We’re going to push all the way through year-end.”