Craft Distilleries are bracing themselves for tax increases
Craft distilleries are preparing for a huge tax hike in the New Year that the company says will destroy the craft liquor industry.
WASHINGTON (FOX 5 DC) – – Craft distilleries are preparing for a huge tax hike in the New Year that the company says will destroy the craft liquor industry.
If Congress fails to act, the craft distilleries’ excise tax will be increased by 400 percent.
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Currently, the excise distilleries that pay on their liquor are based on how much is being produced. Smaller distilleries that produce less pay less than the big companies that make millions of dollars and sell worldwide.
This has been the case for three years, since Congress granted a tax break to help small distilleries thrive.
Megan Kyker is assisting a customer at the Cotton & Reed rum distillery in Union Market on Friday April 3, 2020. (Photo by Tom Williams / CQ-Roll Call, Inc. via Getty Images)
While there was bipartisan support to make the cuts permanent, Congress passed no law this year to do it. If they don’t do it by December 31, small distilleries will pay tax from $ 2.70 on a gallon of alcohol to $ 13.50.
Companies already injured from the pandemic say it might be too bearable for some companies.
“That’s what really hits you on the head,” said Becky Harris, president and chief distiller of Catoctin Creek Distillery in Purcellville.
Harris also directs the American Craft Spirits Association.
“Just like in restaurants and bars, so many small distillery tasting rooms just hold on and hope to make it happen,” Harris said. “And quadrupling that tax rate is going to make it really, very difficult for the smallest distillers to survive.”
Harris said she still hopes Congress can achieve this.
If nothing happened, she said her company will start paying that increased tax rate from February.