Better Stock up on Those Adult Beverages Now
Cristal M Clark
That’s right heavy drinkers, you may want to start stocking up now on your favorite adult beverages because by Friday, liquor taxes could go up 400% thanks to Congress. The Craft Beverage Modernization and Tax Reform Act, is set to expire on Dec. 31, and legislators have until Friday to extend it.
And if they don’t, smaller breweries, distilleries and wineries will face a 400% tax increase, with the first payment for many due on Jan. 15 which has set off some widespread panic among these smaller breweries, distilleries and wineries. The Craft Beverage Modernization and Tax Reform act was passed by Congress at the end of 2017 as part of the Tax Cuts and Jobs Act.
The reduction in taxes encouraged hundreds of new businesses to open, including about 2,000 breweries and 400 distilleries in the last two years. Those companies are especially unprepared for a sudden increase in their excise taxes, which, for most distillers, must be paid every other week.
The 2017 legislation cut the amount that all distilleries had to pay on the first 100,000 proof gallons from $13.50 to $2.70 (a proof gallon is a gallon of spirit at 50 percent alcohol). Breweries and wineries received similar reductions, though in their cases the cuts were largely reserved for small producers. Such excise taxes are paid on top of normal corporate taxes.
The smaller breweries, distilleries and wineries used the tax cut to also hire, purchase equipment and grow.
The tax cut enjoys overwhelming bipartisan support — a House bill to make it permanent, introduced earlier this year, has 324 co-sponsors, while an identical Senate version has 73. Now under normal circumstances this bill should have flew right on through congress but, because our government seems to love to live life in a constant state of chaos and dysfunction, the bill sort of sat ignored over the summer.
This summer, the House Ways and Means Committee passed legislation to try to make the tax cut permanent, and a Senate task force endorsed the idea, and that’s around the time things just started being left on the table and forgotten about.
Industry lobbyists and legislators who do support the bill, say that at this point all that they can realistically expect is a one-year extension. Such short-term relief would make it hard for distillers to make long-term investments, like hiring staff, increasing production or buying new equipment.
It is worth a mention that Large brewing companies also benefit. AB InBev, which owns Budweiser, Corona and many other brands, now receives about $12 million in tax savings. So undoubtedly should congress fail to act and at least get that one year extension on this tax cut the smaller companies will in fact be bringing the big dogs to the table and what one can only guess would be alcohol uproar.
In the meantime, you should start stocking up on your favorite alcohol just in case, sounds like it’s time to drink up.
Cristal M Clark