During the Covid-19 pandemic, the worker starts making craft beer in a factory.
After promising to work all night until an agreement was reached, the U.S. Senators passed a law around midnight on Monday that grants permanent federal excise tax (FET) relief to brewers, distillers, winemakers and other alcoholic beverage manufacturers. The so-called Craft Beverage Modernization and Tax Reform Act (CBMTRA) is part of the $ 2.3 trillion Omnibus Spending and COVID rescue package that the House of Representatives passed the previous Monday. The President has promised to sign it.
American alcohol producers and their allies have been asking Congress for the past decade or more to grant them permanent exemption from the excise taxes that beverage alcohol manufacturers must pay the federal government for every gallon or barrel of liquid they make. In 2015, they convinced members of Congress to introduce the CBMTRA law, which will lower the tax. In recent years, Congress has temporarily enacted the law twice.
The last extension of the provisions of the law was set for sunset on December 31st. Legislators on Monday added CBMTRA’s persistence to the federal spending bill, which includes $ 900 billion for COVID relief.
The Beer Institute (BI), which advocates the interests of American breweries of all sizes, says CBMTRA’s failure could have put thousands of breweries out of business. Given that COVID and its associated restrictions threaten to wipe out surviving small beverage makers in winter, Rick Goddard, co-founder of Southern Brewing in Athens, recently told a BI forum that the adoption of CBMTRA for his brewing brothers is literally a Question of life or economic death and sisters.
“Without this permanent tax break, it will be very difficult to get out of the second half of this global pandemic and have an idea how to move forward,” he said. On the day of the forum, Goddard said he quarantined his employees home for five to seven days after learning that one of his front-of-house managers who lives with one of his brewers tested positive for COVID would have.
FET reform brought the Beer Institute and Brewers Association (BA) craft brewery trade group together for the first time in 2015 when they compromised bridging the gaps between their two respective FET agendas and formed a consortium with key trade associations, the wine, spirits, other beverage alcohol manufacturers, distribution, distribution and supply chain. Since then, they have worked together to fully engage Congress on this issue.
“Ensuring a permanent recalibration of federal excise tax for small breweries has been a top priority for the Brewers Association since 2009,” writes Katie Marisic, federal affairs director at BA. ”
The fact that COVID continues to put the beer and beverage industry at great risk only added to the tension. As BI estimates that more than 651,000 jobs will be lost to COVID by the end of this year, some might even say despair.
“I will pay my taxes. We also worry about paying an extra tax on top of what we’re already paying on top of other industries (most of which don’t pay FET), ”says Goddard. “It is very, very difficult to plan and create an environment in which your employees feel comfortable that they will have a job on January 1st.”
According to Bob Pease, CEO of BA, 81% of its members participated in the Federal Payroll Protection (PPP) program this year, which has been widely criticized for not helping small food and beverage companies enough. He also says the country’s 8,200 or so breweries have used the savings from temporary CBMTRA regulations to create 25,000 new jobs between 2018 and 2019.
Larry Horowitz, director of the brewery at Ten20 Brewing in Louisville, which opened this fall, wants to employ 100 people but has only hired 20 because of COVID. He told the BI forum that without CBMTRA, he expected his FET rate to double.
“That’s roughly the equivalent of a full-time employee,” he said.
CMBTRA is extremely popular with members of Congress, possibly due to the fact that every congressional district in the country has a craft brewery, not to mention a selection of wineries, distilleries, and the like. As a will, the bill bridges a non-partisan range of 350 sponsors in the House of Representatives and 77 in the Senate.
Female engineer wearing a face mask while working in a brewery speaking to a group of operators in … [+]
“I’ve seen firsthand how incentives for craft beverages manufacturers have helped small businesses in Oregon grow, hire, and provide new benefits to their workers. Extending these breaks is especially important as the pandemic has hit these small businesses hard, “Senate’s main sponsor Ron Wyden (D-OR) wrote in a statement.
Following the passing, Jim McGreevy, President and CEO of BI, wrote in a statement: “With the passage of permanent alcohol tax breaks … brewers and beer importers and the millions of American beer-dependent jobs, from farmers to restaurant workers, will have millions of American jobs long-term tax security to help them weather the COVID-19 pandemic. “
But he added that Congress must do more to save the industries that provide and support hospitality.
“This legislation is a first step in helping the bar and restaurant industry recover, but more is needed to help our friends and neighbors who work in the hospitality industry and are particularly hard hit by the pandemic,” wrote he.
In a statement on the adoption of COVID and FET relief laws from the Save the Beer Economy Coalition of Brewing, Hospitality, Agriculture, Manufacturing and Retailing, Sean Kennedy, executive vice president of the National Restaurant Association (NRA) said, “Restaurants and Ours Partners at the craft brewers, distilleries and wineries that supply our bars appreciate the efforts to expand this important tax break. The sale of beverages in both our restaurants and through delivery has been a lifeline during the pandemic and will continue to play an important role in recovery. “
Although the NRA suggests that more needs to be done, it welcomes the COVID spending package to revitalize PPP, which this time only offers restaurant-specific, favorable terms. The organization also welcomes Congress for increasing business lunch tax deductions, including some additional tax breaks to help restaurants.
However, a large number of critics in both parties, representing a range of interests, deride the meal deduction as a confusing and useless benefit that will not benefit anyone outside of the “three martini lunch” crowd that tends to give their dollars to expensive corporate chains (including some owned by Donald Trump), many of which will be subject to extremely limited seating restrictions for the foreseeable future.
The Independent Restaurant Coalition, which campaigns for the Restaurants Act, which provides $ 120 billion in direct funding for independent restaurants, is not happy with the relatively limited amount of aid they are getting in the spending package.
While this offers little consolation, independent restaurants and bars, like their counterparts, will also benefit indirectly from the FET reform.