- A bipartisan group of 57 senators sent a letter to Congress on Tuesday asking to permanently extend the relief from existing federal excise tax rates for alcoholic beverage producers. President Donald Trump originally implemented the tax cuts in 2017 and these benefits are set to expire beginning in January 2021.
- The coalition argues that craft distillers, brewers and winemakers have already “seen dramatic declines in revenue" because of the closures of on-premise establishments. Because the losses affect a wide range of jobs in the economy, senators say it is “imperative” that this permanent relief implementation of excise taxes be adopted by the end of the year.
- Since the summer, Congress has been in a stalemate over enacting another round of economic stimulus relief, and with the year coming to a close, The Hill reported it will prove “challenging” to enact an extension of this tax relief bill. Nevertheless, tax breaks for alcoholic beverage producers continue to have widespread support from lawmakers since its inception in 2017.
Beer, wine, cider and mead makers have been battered by the pandemic. In May, Blue Mountain Brewery and Harpoon Brewery told Food Dive they were wondering how they would weather months of slow sales. At Blue Mountain Brewery, weekly sales in May were 15% of the revenue generated during normal operations. At Harpoon Brewery, revenue was down about 30% compared to before the pandemic.
But those two breweries were not an anomaly. Nathan Greene, an analyst at the Beverage Marketing Corporation, told Food Dive that up to 30% of the craft breweries that existed in 2019 won’t make it through the pandemic. As craft makes up more than 25% of the $116 billion U.S. beer market, according to the Brewers Association, losing a third of these businesses does not bode well for the thousands of employees and ancillary businesses that depend on the brews sold at these onsite facilities.
The effects of the pandemic are rippling across the alcoholic category. During the six-week period ended April 11, Nielsen said there were about 1,900 fewer beer, flavored malt beverages and cider items for sale across the category. Wine too has struggled under a raging wildfire season in the western U.S. And a study from the Distilled Spirits Council of the United States (DISCUS) in August confirmed that craft distillers lost 41% of their sales, or $700 million in revenue, due to the coronavirus pandemic.
With the end of the pandemic uncertain, paying increased taxes on top of staggering losses may be the final straw for many of these businesses that are hanging on precariously. The tax relief bill — called the Craft Beverage Modernization and Tax Reform Act — was extended last year, indicating that the measure has strong support.
Senators are not the only ones advocating for the continuation of these excise taxes. A host of business groups, including the Beer Institute, National Restaurant Association and National Barley Growers Association are gathering in solidarity to persuade Congress to alleviate this tax burden. In addition to promoting the extension of federal tax relief for alcohol producers, groups across the beer supply chain formed a new coalition this week called Save the Beer Economy.
Despite its popularity, there is no guarantee that the tax excise extension will come to fruition. The Hill reported that lawmakers proposing this tax relief measure as a standalone proposal are unlikely to see it passed in the remaining weeks of the year when there are other pressing matters. Congress needs to pass legislation by Dec. 11 to prevent a government shutdown, and both parties are also working to compromise on a stimulus package for next year. Senators could append the alcohol tax relief extension to either piece of legislation, although there is no guarantee that it would make it to the floor.