Craft companies involved in the fight will have to expect significant tax increases if Congress does not take action during the year.
WASHINGTON– Leaders of eight major alcoholic beverage associations today sent a letter to Congress calling for the immediate adoption of a bipartisan bill to modernise the beverage trade and reform the tax system, p. 362/H.R. 1175 (CBMTRA), to rescue artisan distillers, brewers, winemakers, cider and honey producers from the devastating tax increases in January.
The coalition letter was signed by the directors of the Beer Institute, the Brewer’s Association, the U.S. Distilled Spirits Council, the American Association of Alcoholic Crafts, the Wine Institute, WineAmerica, the American Cider Association and the American Meat Association.
Today, a few weeks after the federal consumption tax increase, manufacturers are concerned that their companies won’t be able to bear the additional burden after such a difficult year, the coalition government said. Unlike other tax ordinances, the increase in federal excise duties will have a direct impact on industry if Congress does nothing.
In 2018, the non-alcoholic beverage industry provided more than 5.4 million jobs nationwide and generated more than $562 billion.
This year, manufacturers across the country have faced a sharp drop in revenues, production suspensions, layoffs or layoffs of workers and closed their doors to visitors, the coalition said. These changes have affected not only the livelihoods of their workers, but also those of farmers, traders, truck drivers, warehousemen and countless others associated with these industries.
On the initiative of Senators Ron Widen (D-Ore.) and Roy Blunt (R-Mo.) and representatives Ron Kind (D-Wis.) and Mike Kelly (R-Pa.), the CBMTRA will implement ongoing reforms from 2017 onwards that will create a fair and equitable tax structure for brewers, winemakers, distillers and importers of all alcoholic beverages. The bill currently has 351 co-sponsors in the House of Representatives and 77 in the Senate.
U.S. SMALL ENTREPRENEURS RESPOND
The letter also contained comments from owners of small distilleries, breweries and cellars, which stressed the relevance of the legislation:
When the local community needed us, we delivered more than 405,000 bottles of hand sanitizer (or 300 million bottles of hand sanitizer) to people across the state, said Jason Barrett, president of Black Button Distitling in Rochester, New York. Our employees work seven days a week, up to 20 hours a day, in all weather conditions, fighting for their communities, knowing that many lives and livelihoods depend on it. At the same time, we have already lost 40% of our employees this year due to unavoidable layoffs. Due to the loss of our field service department, the tasting income and the lower bar and restaurant sales, we simply could not afford to keep it. We have been forced to reduce alcohol production by more than 50%, which has been detrimental to our farmers, glass suppliers, label manufacturers and other partners. We’ve cut budgets across the company to stop the bleeding, but if this increase in federal consumption tax continues, the additional losses next year could cost four or more jobs.
As we try to complete our 2021 business plans, there’s nothing more urgent for the two of us here in Iowa and for our more extensive artisanal distillery operations than the reduced FET rate we’ve received over the last three years – a rate previously unavailable to small distilleries, says Jeff Quint, owner and founder of the Cedar Ridge Distillery in Iowa. Swisher, Iowa. In the first two years, these crucial savings have allowed us to reinvest in our small businesses and support peripheral industries such as agriculture, hotels and tourism, and industry in the US; but this year’s tariff cuts have only kept our business alive as we try to survive. If we can get them for the first… If we get the 400% tax increase planned for January 2021, we will almost certainly face high corporate debt and massive tax cuts.
The COVID 19 pandemic caused huge losses to breweries and beer importers, said Dan Coppman, CEO of Heavy Seas Beer & E.Krisper’s Cider in Baltimore, Maryland. In particular, our volume fell by 15% and our revenues by 20% because we had to close the water line. The CBMTRA leak will be another blow to the stomach if we can afford it in any quantity.
The money we saved by recalibrating excise duties has allowed us to keep jobs during the pandemic, said Jeff Shrag, founder and owner of Mother’s Brewing Co. in Springfield, Missouri. In line with our budget for next year, we are re-evaluating our staffing levels, which is a big question mark. Yes, we can keep our current staff if the recalibration goes ahead, otherwise we’ll most likely have to do without staff. We just don’t have any stuffing.
Like others in our great state of California, we faced many challenges throughout the year as a result of the COWID 19 pandemic and the fires that devastated the Napa Valley and other major wine regions, said Robin Buggett, managing partner of Alpha Omega Winery in Rutherford, California. We have managed to stay afloat by introducing virtual tasting and developing online sales, and we have worked to support restaurants and small businesses in our community. But now the future of our industry is at stake. The increase in excise duties, combined with a new round of compulsory closures of tasting rooms, higher maintenance costs due to the pandemic, and damage to vineyards, buildings, barrels, equipment and inventory due to fires, will be too high.
As the average family winery in the Willamette Valley, we suffered a lot in 2020, says Janie Brooks Heuck, President and CEO of Brooks Winery in Willamette. Amity, Oregon. From the power outage in March, we immediately lost 70% of our income from restaurants across the country and our tasting room. We are now going back to our daily tasks to make sure that our tasting room is only open in winter or served outside. Without any relaxation, other than the first round of public-private partnership loans, our excise duties, which will rise in 2021, will be disruptive at the federal level and represent an additional burden that many, including our vineyard, are unlikely to be able to bear.
There is normal uncertainty in any business, and pursuing the American dream comes with risks, said John Behrens, a board member of the American Cider Association and founder and president of Farmhaus Cider in Grand Rapids, Michigan. This risk and uncertainty is understandable and necessary. But what we are experiencing now because of the artificial uncertainty created by the lack of approval for the sustainability of the CBMTRA is different from what we are experiencing now. We urgently need a solution. Sidr is the quintessence of small business, the success story of the American Dream, built on local agriculture and community. If it’s not worth saving, then what is? If we don’t succeed in making CBMTRA permanent now, it would be a devastating blow to our leadership company and several hundred others like us.
The year 2020 has been a challenge for everyone, but it has touched the hearts and pockets of alcohol producers, says Brendaline Armstrong, business development manager for Upper Reach Meadery. Phoenixville, Pennsylvania. The month of March marked a radical change in our industry and in the services that support us. The people affected by the Kovid 19 pandemic are not relieved and many of us will not survive, but the inclusion of the craft modernisation and tax reform bill in the next legislative package will be a lifeline that will help us to cook for another day.
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