In Major Victory for Industry, Craft Distillers Earn Tax Parity
December 20, 2017 (Washington) –The U.S. Congress has passed the Craft Modernization and Tax Reform Act as part of the larger tax overhaul plan. The passage marks the first major legislation in modern history that will directly support and grow America’s 1,589 small craft distillers via a critical, reduced Federal Excise Tax (FET) that finally gives craft spirits parity with its counterparts in beer and wine. The legislation has been ACSA’s top legislative priority, and its passage today marks a major victory for the distilled spirits industry.
Prior to its passage, the American Craft Spirits Association, together with other major beverage industry groups, worked tirelessly to rally support for the legislation. Though the overall tax bill may not have been met with universal support, the originally-filed Federal Excise Tax reduction bills in both the House and Senate garnered tremendous bipartisan support with endorsement by more than two-thirds of the House and a majority of the Senate.
The need for legislation was clear, as the current tax policy allowed for a reduced excise tax rate for small producers of beer and wine while leaving craft distillers at the same rate as major corporate suppliers. In fact, craft spirits producers had paid 5.4 times more FET than a craft brewer, and 16.4 times more FET than a small winery, for equal quantities of beverage alcohol.
For the first time, the legislation reduces the Federal Excise Tax from $13.50 to $2.70 per gallon for the first 100,000 proof gallons removed from bond per year for a two-year period.
“This is the largest legislative victory for our industry in modern history,” said Mark Shilling, President, American Craft Spirits Association. “For years, we have fought for excise tax fairness, and with this change our industry will see immediate benefits, including the ability to hire more Americans and increase production with new equipment. We look forward to reinvesting these critical and long overdue savings into growing our workforce, production capabilities, and tourism experiences and supporting local agriculture.”
Margie A.S. Lehrman, Executive Director, American Craft Spirits Association added, “The burdensome Federal Excise Tax has been a substantial impediment to economic growth in the craft spirits industry, and we applaud this bipartisan commitment to making change. On this historic occasion, we proudly celebrate with our friends within the beer, wine and spirits industry who have helped rally support for this critical legislation.”
The craft distilling industry is growing, with, on average, one distillery opening per day. There are craft spirits distilleries operating in the U.S. in all 50 states, employing close to 20,000 people. Investments in the industry in the last decade have now reached over $600 million, according to the Craft Spirits Data Project (2017).
The American Craft Spirits Association is the only registered, national non-profit trade association representing the U.S. craft spirits industry. Its mission is to elevate and advocate for the community of craft spirits producers, and membership in ACSA is open to anyone.
ACSA is governed by a Board of Directors elected by the eligible voting members of the Association. Voting members must be independent licensed distillers (DSPs) annually removing fewer than 750,000 proof gallons from bond (the amount on which a Federal Excise Tax is paid.) For information about ACSA, call 202-669-3661.
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