Eight trade associations have written to Congress to urge the immediate extension of tax relief for US distillers, a move described as crucial for helping companies stay afloat.
The Craft Beverage Modernization and Tax Reform Act (CBMTRA) was first passed in 2017, marking the first time the US government reduced taxes for spirits producers of all sizes since the Civil War. The act is due to expire on 31 December 2020 after a one-year extension.
The CEOs of eight alcohol trade groups sent a letter to Congressional leaders to call for the extension of the CBMTRA. It was signed by representatives from the Distilled Spirits Council of the US, American Craft Spirits Association, Beer Institute, Brewers Association, Wine Institute, Wine America, the American Cider Association and American Mead Makers Association.
In the letter, the coalition of trade bodies said: “Now, weeks away from a federal excise tax increase, producers fear their businesses will not be able to shoulder another burden after such a challenging year.
“Unlike other tax provisions, absent Congressional action, the increase in federal excise taxes will have an immediate impact on the industries.
“This year, producers across the country have seen dramatic declines in revenue, suspended production, furloughed or laid off employees, and closed their doors to visitors. These changes have impacted not only the livelihoods of their employees – but also the livelihoods of farmers, distributors, truck drivers, warehouse workers and countless others connected to the industries.”
In 2018, the alcohol industry supported more than 5.4 million jobs across the US and generated more than US$562 billion in economic activity.
The CBMTRA bill currently has 351 co-sponsors in the house and 77 in the senate, the trade groups said. If the legislation is not extended, some producers may have to pay the higher rates as soon as 15 January.
Jason Barrett, president of New York-based Black Button Distilling, said: “Our employees have been working seven days a week, up to 20 hours a day regardless of the weather conditions fighting for their community with the knowledge that many lives and livelihoods depend on it.
“At the same time, we have already lost 40% of our staff this year from unavoidable cuts. With the loss of our off-site division, tasting room revenue, and decreased sales to bars and restaurants, we just could not afford to keep them.
“We were forced to cut back our production of spirits by over 50%, which hurts our farmers, glass suppliers, and label producers and other partners. We have slashed budgets across the company trying to stem the bleeding, but if this federal excise tax increase moves forward, the additional loss next year could cost upwards of four or more additional jobs.”
Jeff Quint, owner and founder of Iowa’s Cedar Ridge Distillery, also said the reduced rate should be made permanent immediately.
He said: “In its first two years, this critical savings allowed us to reinvest in our small businesses and support peripheral industries, like US agriculture, hospitality and tourism, and manufacturing; but this year, the reduced rate has merely helped keep our businesses afloat as we attempt to survive. If we receive the 400% tax increase slated for January 1, 2021, we will almost certainly face more company debt and sweeping layoffs.”
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Author: Nicola Carruthers