Established in 1976, the tax rate for small brewers has not kept pace with the economic realities between small and large brewers in the United States. Under current law, a small brewer that produces less than 2 million barrels (bbls) per year pays $7 per barrel on its first 60,000 bbls produced per year. If production exceeds 60,000 barrels, the per barrel tax is $18, which is the same amount that the two largest brewers pay on their production of more than 160 million bbls. Does that seem right to you?
Massachusetts Congressman Richard Neal doesn’t think so, which is why he again is putting forth the Small Brewer Reinvestment and Expanding Workforce Act, which would create a graduated excise tax on barrels of beer. Last week, he visited Barrington Brewery with a few famous brewers.
On his Facebook page: “This afternoon in Great Barrington, I joined Samuel Adams founder Jim Koch and over a dozen other craft brewers from across Massachusetts to promote my bipartisan bill, the Small Brewer Reinvestment and Expanding Workforce Act. There are 2,300 small and independent craft brewers across the country, employing between 10 and 50 workers each. This job-creating industry employs over 100,000 full-time and part-time workers and generates more than $3 billion in wages and benefits a year. My legislation would increase opportunities for growth.”
The act would create a graduated beer excise tax rate of $3.50 and $16 for small brewers and raise the ceiling to qualify for the small brewer rates from 2 million to 6 million bbls. Neal plans to introduce this bipartisan bill with co-author Jim Gerlach (R-Pa.) in February. Those modifications are minor, but an economic impact study by John Friedman, an economist at Harvard University, estimated that over five years the Small Brewer Reinvestment and Expanding Workforce Act would generate nearly 4,400 jobs in the first year with an average of 300 jobs in each subsequent year over five years. In addition, the study estimates that the bill would generate roughly $153 million in economic activity in the first year and approximately $865 million over five years.
From a press release on the congressman’s website: “Congressman Neal understands that job creation is best done by small business,” said Gary Happ of Barrington Brewery and Restaurant. “His tenacity in making sure that the Barrington Brewery has a chance to compete in an industry dominated by the big guys gives folks like us a chance to brew and sell a quality product. That chance is all we ask as we believe in our craft, our products and the potential for us to put more people to work.”
Neal knows the people he represents – they’re his neighbors. According to the Massachusetts Brewers Guild, there are 33 craft breweries in the Commonwealth, employing 1,333 people. By 2013, the number of craft breweries is expected to reach 43. Total annual revenues from small brewers in Massachusetts is $535 million, while the barrelage is 386,662 lbs. In addition, the excise tax paid from Massachusetts brewers is $1.275 million.