Local brewers and distillers have mixed feelings about the savings their businesses will receive from the Republican tax plan.
The Tax Cuts and Jobs Act includes a two-year reduction of federal excise taxes on beer, wine and spirits. The cuts came from provisions of the popular Craft Beverage Modernization and Tax Reform Act, originally introduced by U.S. Sen. Ron Wyden of Oregon.
Brewers will see federal excise taxes on their first 60,000 barrels produced cut from $7 to $3.50. Taxes on distilled spirits were lowered from $13.50 to $2.70 per gallon for the first 100,000 gallons produced.
Most Oregon-based breweries fall well under the threshold of the tax cut. Fort George Brewery, the largest in Clatsop County, sold fewer than 14,000 barrels in the state last year, according to the Oregon Liquor Control Commission. Jack Harris, co-owner of Fort George, said the tax cut for craft brewers has been a long time coming.
“That was good news that it passed, but unfortunate that it passed with so many other controversial issues,” Harris said.
Bob Pease, CEO of the Brewers Association in Boulder, Colorado, representing small and independent craft brewers, said he has been working on cutting barrel excise taxes for nearly a decade.
“It’s significant, because the current (excise tax) rate has been in place since 1976,” he said. “Our belief is that breweries will take the savings and reinvest them in their businesses.”
The association would have liked the alcohol legislation to be passed on its own but were told that was unrealistic, Pease said.
Lawrence Cary, co-owner of Pilot House Distilling, said the reduction in liquor taxes will help with his company’s expansion.
“It’s long overdue for the spirit industry,” Cary said, adding he’d like keep his opinions on the overall tax plan to himself. “With this, you might see a little boom in our production.”
Wyden, a co-chairman of the Senate Bipartisan Small Brewers Caucus, introduced the Craft Beverage Modernization and Tax Reform Act in 2015 to reduce taxes and compliance rules for brewers, cideries, vintners and distillers. The bill was a combination of previously attempted legislation to help the industries and had broad, bipartisan support.
The Los Angeles Times reported that including provisions of the bill in the tax plan was part of an unsuccessful effort by Republicans to curry Wyden’s favor and vote. Wyden spokesman Hank Stern told Willamette Week the effort was a non-starter. Wyden and other Senate Democrats opposed the tax plan.
“Senator Wyden was and is proud to lead the fight against a bill that showers corporations with goodies and raises taxes on over half of the middle class,” Stern said.