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September 9, 2020

CT brewery industry calling for continued tax rate reductions

Photo | Foxwoods Resort Casino Stony Creek Brewery's second location at Foxwoods Resort Casino.

Connecticut brewery advocates are urging Congress to pass a bill that would continue reducing the tax rate for craft beer brewed by independent breweries.

On Dec. 31, the Federal Excise Tax (FET) rates, authorized under the Tax Cuts and Jobs Act of 2017, is set to expire for small and independent breweries across the U.S. In general, the act provides a tax rate of $16 a barrel on the first six million barrels of beer brewed by a brewer, and provides a rate of $18 per barrel on remaining barrels, according to the Alcohol and Tobacco Tax and Trade Bureau.

The Connecticut Brewers Guild, an industry trade group that advocates for the majority of the state's 115 craft breweries, is asking Congress to pass the Craft Beverage Modernization and Tax Reform Act, which officials say will make the current FET rates permanent.

The legislation would also establish a "fair and equitable tax structure" for winemakers, distillers, cider makers and importers of all beverage alcohol, it says.

Since 2017, the guild says the reduced tax rate has allowed brewers to hire new workers and grow their business. Without action from Congress, it cautioned that the industry of more than 8,300 breweries along with beer importers will face an estimated $154 million annual excise tax increase starting in Jan. 2021.

In total, the guild estimates that the existing FET rates have saved the nation's craft brewing industry nearly $80 million annually. 

Phil Pappas, executive director of the Connecticut Brewers Guild, said brewers in the state, which have been hit hard by COVID-19-related shut downs, will "face a massive financial burden."

“The craft beer industry has experienced sustained growth in Connecticut and across the country and the current FET rate has gone a long way to empower our brewers to make significant investments into their businesses," Pappas said.
The guild is calling for a "Day of Action" on Wednesday where participants are encouraged to contact their members of Congress and urge them to pass the bipartisan legislation.
According to the Brewers Association, America's beer industry supports more than 2.1 million jobs, including 559,545 from the craft industry.

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