Brewers Getting Frothy About Beer Tax Cut Proposals

Craft brewers and beer behemoths battle over how to reduce the beer excise tax.
Matthew HellerApril 14, 2015
Brewers Getting Frothy About Beer Tax Cut Proposals

A storm is brewing over competing proposals to reform the beer excise tax that pit small craft producers against “big beer.”

According to the Beer Institute, 40% of what consumers pay for beer goes to various federal, state, and local taxes. Congress originally approved the federal tax in the 1860s as a revenue source for fighting the Civil War.

As the Stamford Advocate reports, the beer industry as a whole agrees that the tax — which raises about $3.6 billion annually for the U.S. treasury — should be reduced. But different factions disagree over “who should bear the greater tax burden.”

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“The major players, who have seen their market share drop in recent years? Or the smaller upstarts whose inventive products and creative names and packaging are capturing an ever-larger percentage of beer-drinker dollars?” asks the Advocate.

Under existing law, small producers pay $7 tax per barrel up to 60,000 barrels, after which they pay $18 per barrel. Big brewers that produce over 2 million barrels and importers pay $18 for every barrel.

The craft sector is backing the Small BREW Act proposal, which would reduce taxes by half to $3.50 for the first 60,000 barrels and increase incrementally until production exceeds 2 million barrels, when the rate would go to $18. The tax rate for imported brands and big producers would remain unchanged.

“For multinational behemoths like Anheuser-Busch [InBev], taxes are less than a drop in the bucket, if you’ll forgive the pun,” Sen. Richard Blumenthal, Connecticut Democrat and a co-sponsor of the bill, told the Advocate. “But the economic impact of this tax reduction would be enormous for small brewers, proportionate to their revenue and size.”

The beer behemoths, however, are backing the rival Fair BEER Act, which would reduce taxes for all brewers — regardless of size. “I reject the notion that this is about big versus small,” said James A. McGreevy III, president of the Beer Institute.

The Advocate said the beer bills could get rolled into one or become part of a larger corporate tax reform effort. “For now, there’s little evidence the beer war will end anytime soon,” it concluded.