Our fight for full adoption of CBMTRA is still going strong, and we have seen a recent step closer to victory!
CBMTRA — the Craft Beverage Modernization and Tax Reform Act –, among other things, reduces our excise taxes by about 50%. It’s been a top priority for brewers, distillers, winemakers, and our associated trade groups since 2015.
Originally, CBMTRA had been included in President Trump’s Tax Cuts and Jobs Act of 2017 — a controversial omnibus measure that included a number of proposed tax abatement bills. However, that legislation was set to expire at the end of 2019, leaving us — and over 7,700 of our brewing brethren — in the lurch, wondering what would happen next.
Luckily, our legislators in Washington didn’t leave us hanging.
In early December, the House Ways and Means Committee and the Senate Finance Committee recommended extending the act for another year to their respective houses, giving us some hope that our tax liability throughout 2020 would be eased a bit before Congress recessed for the holidays.
It was a bit of a nail-biter. Congress had three days to act before they went on vacay.
Brewers Association president and CEO Bob Pease wrote an email to members.
“The [federal excise tax] rates, which were recalibrated in 2018, have been a boon to small and independent brewers located in all 50 states and nearly every congressional district, empowering them to reinvest in their businesses and resulting in an annual tax savings of more than $80 million,” he wrote. “Brewers reinvest these savings in improved employee benefits, new equipment, expanded business plans, and the creation of thousands of new jobs. By proposing that the language be extended another year, congressional leaders have acknowledged the profound impact the reduced excise tax has had on the growth and trajectory of our uniquely American industry, which is responsible for contributing $79.1 billion to the U.S. economy in 2018 and more than 550,000 jobs.”
Thankfully, the full House passed the measure on the 17th of December, with 297 of the 435 House members voting in favor of the measure. The Senate followed two days later. We fully expected President Trump to sign the measure into law, which he did in the following week.
Jim McGreevy, president and CEO of the Beer Institute, said, “By signing legislation today to maintain current excise tax rates on beer for one year, President Trump provides brewers and beer importers the certainty they need to continue growing and reinvesting in their businesses, hiring new employees, innovating unique products, and producing America’s most popular alcohol beverage.”
Shortly following the successful vote, the Brewers Association deployed a press release, in which Ryan was quoted.
“Cape May Brewing Company is a small, family-owned business,” he said, “and with the extension of CBMTRA, we expect to save over $100,000 next year. Every dollar we make is reinvested into our brewery. As we intend to increase production by nearly 30% next year, this money could be used to create a number of well-paying jobs in the county with the highest unemployment rate in New Jersey.”
Cape May Brewing Company is what’s known as a “breakeven” company: meaning that every dollar we make gets reinvested into the company.
And we’re not the only ones. Last year, the Brewers Association made public a survey of its members, enquiring as to what we’d done with the money we’d saved due to CBMTRA. According to the survey, 73% of breweries bought new equipment, upgraded their taprooms, or moved into new buildings; 53% hired new employees, 39% added employee benefits, increased pay, offered insurances, or expanded vacation time; and 21% reported an increase to charitable donations.
However, that can all come to an end in the coming year. This extension is only through 2020, and Congress and the president can decide to extend it further or not.
So, the struggle continues. More than two-thirds of Americans support this measure, giving much-needed tax relief to the beer industry, which supports 2.1 million jobs throughout the country.
We hope to see permanence in this tax rate, but that can only be achieved through your support. Contact your members of Congress today!