New hires, improved benefits, new equipment, expanded production, and new buildings. These are just some of the things craft spirit distillers have been talking about over the last two years as they have enjoyed parity with their friends in the beer and wine industries with a reduction in their Federal Excise Taxes.
It was back on January 1, 2018 when distillers got their first taste of what a lower Federal Excise Tax was like. That was the date when a temporary two-year tax reduction took effect. Since then the major distillers associations have been working diligently with state legislators to build a consensus to have the temporary reduction changed to permanent. Though a permanent reduction fell by the wayside a one-year extension was agreed to and signed by the House and the Senate earlier in the week and now President Trump has signed the extension for the Craft Beverage Modernization & Tax Reform Act as a part of a larger tax package.
According to Special Assistant to the President Judd Deere President Trump signed the legislation aboard Air Force One after leaving Joint Base Andrews. The bill was part of the much larger Fiscal Year 2020 Appropriations Legislation that President Trump signed Friday night before the clock struck midnight while traveling aboard Air Force One.
A 400% Federal Excise Tax Increase Has Been Avoided (for Now)
Both the American Craft Spirits Association – ACSA and the Distilled Spirits Council of the United States – DISCUS have released statements applauding the passage of the one-year extension of the Craft Beverage Modernization & Tax Reform Act – CBMTRA.
Federal Excise Tax reform has been American Craft Spirits Association’s top legislative priority, and its extension passage now marks a major victory for the distilled spirits industry. Together with other major beverage industry groups the American Craft Spirits Association has worked tirelessly to rally support for tax relief, which was set to revert back to $13.50 from $2.70 for the first 100,000 proof gallons removed from bond per year. The Craft Beverage Modernization and Tax Reform Act has garnered tremendous bipartisan support with endorsement by more than three-fourths of the House and Senate. Though industry groups had advocated for permanent passage, this one-year extension still provides significant continued relief.
It is clear American Craft Spirits Association’s grassroots storytelling effort is working. The Association has facilitated more than 1,000 meetings with members of Congress and their staffers and brought more than 150 craft spirits producers and the entire Board of Directors and past Presidents to the Hill to share their stories.
“In a political climate that is arguably more divided than ever, we applaud Congress for working together on both sides of the aisle to support our community of 2,000 small businesses and do what is vitally important to keep our industry growing,” said Margie A.S. Lehrman CEO of American Craft Spirits Association. Though FET permanence is critical to the long-term success of our industry and the peripheral industries we support, including U.S. agriculture and hospitality, today we celebrate a small but critical victory. But tomorrow, we will again shift gears to focus on permanent tax relief and long-term parity with our friends in craft beer and wine.”
Chris Montana President of the Association and Co-Owner, Du Nord Craft Spirits said “As President of ACSA and a craft spirits producer myself, I know firsthand the struggles we all face in forecasting our financial futures. This one year extension is a certain step in the right direction, but the need for permanent reform is evident as ever. Without the certainty of a longer-term reduction, it remains difficult to plan for growth and expand.”
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“Although FET relief through 2020 is a great step forward, there is much work yet to do,” said Mark Shilling ACSA Immediate Past President and Chair Government Affairs and Founder Shilling/Crafted. “A one year extension temporarily saves jobs and keeps businesses afloat, but also continues the cycle of uncertainty and this uncertainty means owners cannot plan and manage into the future, and potential investors will be anxious about additional investments into the industry.”
“We are thankful to President Trump for his swift action in signing into law the year-end spending and tax bill, which contains a one-year extension of the Craft Beverage Modernization and Tax Reform Act,” said Chris Swonger President & CEO of Distilled Spirits Council of the United States . This bill supports small businesses and helps craft distillers reinvest in their employees, their businesses and their communities. Because of the president’s support, more than 2,000 craft distillers no longer have to worry about waking up to a huge tax increase come January. Instead, they can focus on creating more jobs, buying more grains from farmers and stimulating local economies. We look forward to continuing to work with Congress and the administration on permanently lowering tax rates for craft distillers to give them certainty for growth and planning beyond 2020.”
Time to Celebrate and Get Ready for the Next Inning
For the next few days distillers can celebrate a one-year victory brought about by the hard working teams at American Craft Spirits Association and the Distilled Spirits Council of the United States that have been on the front lines in the battle to get the FET reduction made permanent. Come early 2020, ASCA, along with its industry allies in spirits, beer, wine and cider says it will once again begin a broader push for permanence.
Now it’s time to raise a glass and celebrate this hard fought victory with friends, family, co-workers and fans. Cheers!