The upcoming tax hike for craft breweries and distilleries is including to the pandemic stress

0
68
The upcoming tax hike for craft breweries and distilleries is adding to the pandemic stress

Kentucky’s craft breweries and distilleries have benefited from the Artisan Beverage Modernization and Tax Reform Act for three years.

The CBMTRA offers artisan distillers, brewers, winemakers, cider makers, and mead makers a tax cut that gives them extra cash to reinvest in their businesses.

One of the regulations says the CBMTRA will cut the “federal excise tax to $ 3.50 a barrel on the first 60,000 barrels for domestic brewers producing less than 2 million barrels a year,” according to the Brewer’s Association.

Previously, the federal excise tax was double the cost at $ 7.00 per barrel.

The CBMTRA expires on December 31st. Therefore, companies would face a tax hike on January 1, 2021 that doubles the federal excise tax on every barrel produced.

“It would essentially only hold back our growth in 2021 and prevent us from hiring new employees,” said Daniel “DH” Harisson, co-founder of Country Boy Brewing.

Harrison said a tax hike would add more pain to the already difficult year caused by pandemic restrictions.

Since Country Boy produces about 15,000 barrels a year, the tax hike would raise his taxes from about $ 50,000 to about $ 100,000.

Harrison said the hit would prevent her from growing the business further.

For a smaller operation like Ethereal Brewing, the tax hike would add about $ 4,500 to taxes. But even if taxes stay at current levels, owner Andrew Bishop said they may have to close by the end of January if the federal government doesn’t offer further relief.

“We have more money than we do,” said Bishop. At some point these funds will run out and we have to close. “

Pandemic restrictions have harmed not only its bottom line, but its employees as well. Right now, Bishop is paying extra to help them.

“We rummage through our own pockets to make sure our employees can pay their bills, rents and mortgages to make ends meet,” said Bishop.

Now, with the tax hike, things are getting worse, but Bishop maintains the belief that everything will work out.

“You just have to tell yourself it’ll be all right,” said Bishop. “If you don’t have that hope, you don’t have the goal to push for, it could become a self-fulfilling prophecy at this point.”

Harrison also remains hopeful.

“We’re trying to stay positive,” said Harrison. “That’s what we do well at craft brewery, and especially here at Country Boy Brewing.”

In order for companies to keep their lower taxes, Congress must act to pass the CBMTRA.

To date, five Kentucky Congressmen and Senator Rand Paul have signed up as co-sponsors.

Rep. John Yarmuth said he was “cautiously optimistic” that it will happen, but as Congress focuses on other coronavirus relief measures, he said it could be postponed until January.

“The more recent information I have is that there is a possibility that it could be included in the year-end package, but there has to be a tax expansion package,” said Rep. Yarmuth. “This is what we call a kind of lucky bag of tax regulations that all expire at the end of the year. We may have to wait until January to put this package together.”

He said all of these provisions would then apply retrospectively as of January 1, so there would be no negative impact from the expiration.

“Either way, I think we’re going to get this thing [CBMTRA] expanded because practically every state has an interest in it, “said Rep. Yarmuth.

He added that the hope is to make the CBMTRA permanent. It currently needs to be expanded every year.