U.S. lawmakers draft tax-cut measures to foster beer industry

This is a story about two federal bills: The BEER Act and the Small BREW Act.

Congress has not taken up the Brewer’s Employment and Excise Relief Act for consideration this session, but it’s waiting in the wings following its reintroduction in various forms five separate times. It promises a tiered per-barrel tax cut for big and small brewers alike.

In the meantime, Congressman Jim Gerlach of the Lehigh Valley has introduced the Small Brewer Reinvestment and Expanding Workforce Act.

“With those dollars that they would save on federal taxes, they would push those right back into their operations, expand their operations and become stronger businesses in our communities,” Gerlach said.

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The BREW act cuts taxes, but not for the industry giants such as MillerCoors and AnheuserBusch — just for the “little guys.”

According to Gerlach, and the Brewers’ Association of craft brewers, small means producing less than 6 million barrels of beer a year.

That agreed-upon cap recently increased from 2 million to 6 million — extending the proposed tax cut in this case to three major producers among craft brewers: the Boston Beer Co., which makes Sam Adams; Yuengling, based in Pottsvile, Pa.; and Pabst in California. Most others don’t approach that threshold.

So, even though taxes on his small brewery in Michigan would go down, brewer Larry Bell’s concerns about competition from the mid-level brewers mean he doesn’t want the bill to pass.

It’s widely known in the world of beer that craft brewers don’t compete against MillerCoors. They compete against other craft brewers.

“I have concerns about marketing — just the sheer clout that a [Sam Adams or Yuengling] would have with that windfall of money in their pocket,” says Bell. “It would certainly make them formidable competitors. And trust me they are formidable competitors right now.”

But Bell is in the minority among small breweries, says the Brewers Association.

In a show of hands at their latest meeting in Washington, D.C., the association’s chief operating officer Bob Pease says, the measure garnered about 95 percent support.

Like Gerlach, Pease argues the money will go straight to growing production, not to marketing. Breweries, he said, come up against their own popularity.

“They have to grow their capacity. In order to do that, they need to reinvest in their physical plant and buy  highly capital-intensive brewing equipment,” he said.

All the craft brewers in the nation sell just 6 percent of the beer consumed in the U.S. The Beer Institute, which also represents very large brewers, would rather see the across-the-board tax cut provided in the BEER Act.

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