Will Excise Tax On Small Breweries Dry Up?

March 7, 2011 Updated Mar 7, 2011 at 6:41 PM EDT

By WKBW News

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Will Excise Tax On Small Breweries Dry Up?

March 7, 2011 Updated Mar 7, 2011 at 6:41 PM EDT

( relese) Beer Industry Supports Nearly 60,000 Jobs In NY – Cutting Taxes On 65 Small Brewing Operations Will Allow Small Breweries Across New York State To Hire More Employees, Expand Their Business

Schumer: Bill Will Help Breweries Create Jobs, Revitalize Downtown Communities

Today, U.S. Senator Charles E. Schumer announced that he is joining a group of bipartisan colleagues to introduce legislation that will cut the excise tax on small breweries in half, helping small brewers across New York reinvest in their business, hire new employees, and revitalize downtown communities. Currently, brewers pay a $7 excise tax for the first 60,000 barrels they brew per year. Under this bill, that rate is slashed to $3.50 per barrel, resulting in potential savings of $210,000 per year for the brewery. The bill also cuts the tax by $2 on the next 1,940,000 barrels produced, resulting in potential savings of $3,880,000 each year. This totals over $4 million in potential annual savings for these brewers. Allowing small breweries to reinvest in their companies is good for the surrounding communities, as many build state-of-the-art structures or renovate existing buildings, preventing blight and creating good-paying jobs.

“Small breweries throughout Upstate New York not only brew great beer, they also create great jobs,” Schumer said. “By cutting taxes for these small businesses, we can help grow the economy and put more New Yorkers back to work in stable, good-paying jobs. Breweries are the crown jewels of so many of our communities, and many of them have renovated charming old warehouses in downtowns across the state. Putting more money back into these businesses will be good for economic development, good for jobs, and good for New York.”

Standing at Southern Tier Brewing Company, Schumer announced the legislation alongside brewery Owner Phineas DeMink and brewery employees. Any brewery that brews fewer than 6 million barrels of beer per year is eligible for the tax cut that will allow brewers to reinvest in workers, new equipment and new space as they expand their business. According to the Brewers Association, this tax cut would have saved small brewing companies over $13 million nationwide in 2008. Microbreweries would have saved nearly $3 million, and brewpubs would have saved nearly $2 million just on the initial 60,000 barrel tax cut for that same year. When the tax break for the additional 1,940,000 barrels is factored in, small breweries throughout the country would have saved over $26 million in 2008, on top of the tax savings from the first 60,000 barrels produced. That represents nearly $40 million dollars in tax savings for an industry that employs New Yorkers throughout the state.

The legislation was introduced last Congress by Senator John Kerry (D-MA), and earned 27 cosponsors and broad bipartisan support. Senator Kerry plans on reintroducing the bill next week.

The approximately 650 small breweries across the country combine to employ nearly 100,000 American workers. In New York, the beer industry directly supports approximately 8,000 jobs through brewing and distribution, and nearly 60,000 jobs overall when retail sales are factored in. These jobs paid nearly $1.7 billion in wages in 2008, and accounted for almost $5 billion in economic activity. A Harvard study of the proposal predicts that passage of the proposal would increase economic activity in the small brewery sector by over $115 million in the first year, and by over $733 million over the first five years. Every dollar saved by cutting the excise tax would result in nearly $11 dollars in economic activity, providing an immediate and substantial boost to the economy. According to the study, the proposal would generate over 2,700 new jobs in the first year, and an additional 375 jobs per year for the next four years.

The Southern Tier Brewing Company opened in February 2004 and began in a leased 10,000 square-foot space in the Stoneman Industrial Park, where the brewery was built. Since opening, Southern Tier has to grown significantly both in size and its product line. In the May/June 2007 issue of ‘‘The New Brewer Journal of the Brewers Association,’’ Southern Tier was credited as having increased in volume by 140 percent from 2005. Currently, the business is in the midst of an expansion that will double the size of the brewery itself. Southern Tier Brewing Company’s products can be found throughout New York and 20-some other states as well as overseas. Southern Tier Brewing Company employs 17 people and produces approximately 30,