As you know, the American Craft Spirits Association (ACSA) is a registered non-profit trade association representing the U.S. craft spirits industry. Our mission is to support the interests of craft spirits producers here in the U.S, an industry that continues to see strongth growth. We estimate there are as many as 800 new and small distilleries across the country, with at least one in every state. This tradition is not new to our nation; distilling represents a great American tradition dating back to the 1700s.
While we, members and supporters of ACSA, are entrepreneurs who continue our first President’s legacy of spirits production, members of our U.S. House and Senate may not fully grasp the nature of our small businesses. We have an opportunity to change that.
Throughout the remainder of the 114th Congress, ACSA will do everything it can to continue to fight to reduce the Federal Excise Tax (FET) for your small craft distillery, but we need you engaged in this fight too. How? Let’s start with a recap of what we accomplished last session.
We began to educate Congress on the growth of craft distilling, clarifying how our sector supports main street, small business job growth, tourism and locally sourced products, much like craft beer and small wineries. We let Congress know that craft distilling has the potential to continue to grow, but a critical and urgent change in tax policies is needed in Washington, D.C.
We met individually in House and Senate offices to emphasize the need for fair tax treatment—a critical step that will help ensure the growth of the industry continues. We explained that nearly thirty five years ago, Congress enacted legislation to provide a reduced FET for small brewers and vintners, which led to tremendous growth for craft brewers and boutique winemakers, but overlooked the distilled spirits community. More than three decades later, our community of small distillers still face this challenge. Distilled spirits producers currently pay an FET of $13.50 on each proof gallon, a rate significantly higher than beer and wine. Distilled spirits producers pay approximately 21 cents per ounce of alcohol compared to beer at 10 cents and wine at 8 cents, according to the Congressional Budget Office.
As a community, we pay the highest tax rates in this field among beer, wine and spirits. It is not fair, it affects our bottom line, and we must fix it.
The argument for a reduced tax rate is clear; it will help our nation’s businesses grow. With a reduced tax rate, some experts estimate each of our nation’s small distillers could add one or two more employees to their payrolls. Likewise, parity with beer and wine would allow burgeoning distilling businesses to invest in new equipment needed to increase production to meet the growing demand for distilled spirits. Local agriculture is likely to enjoy growth with newly planted fields of high value grains needed for whiskey mash. Tourism will increase throughout states as consumers explore the renaissance of the craft spirits movement.
ACSA is strongly supporting any and all efforts in Congress to correct this inequity.
What happened in 2015? No fewer than five bills were introduced, all of which would reduce the tax for small producers from $13.50 to $2.70. H.R. 2520, the Distillery Innovation and Excise Tax Reform Act, introduced by Representatives Todd Young (R-IN) and John Yarmuth (D-KY), is clearly supportive of the craft spirits movement. The legislation would reduce the federal excise tax (FET) on the first 100,000 of production to $2.70 per proof gallon and lower the tax rate from $13.50 to $9.00 per proof gallon for distillers producing above 100K proof gallons.
The strong push for and rallying effort in support of legislation brought the entire industry together for all small producers of spirits, beer and wine with the Craft Beverage Modernization Act. S. 1562 , led by Senator Ron Wyden (D-OR) in the Senate and H.R. 2903 by Congressman Erik Paulsen (R-MN) in the House. Both bills reduce the rate for small distillers to $2.70 per proof gallon.
In December, there was a very serious effort on the part of Senator Wyden in trying to attach his bill to year-end tax legislation. While it did not happen, his bill was endorsed by every major spirits, beer and wine association. The industry was united. ACSA was part of a small group of industry leaders in daily dialogue with the Congress right until the very end of the Session.
A small victory enabled us to pass legislation providing for a quarterly filing of FET for those who produce fewer than 50,000 proof gallons removed from bond rather than the twice monthly filing. Ultimately, our community will save time, and energy to allow us to more efficiently operate our businesses.
That brings us to now – 2016 —where we are renewing our efforts to enact a lower FET. Your help is pivotal to this fight. How? This is what we need:
- Invite your local Member of the U.S. House of Representatives and U.S. Senator to visit your distillery. Let them experience, first hand, the fruits of your labor, observe your passion, and see your dedication to growing a small business in their District. Congress will be holding numerous district work periods around major holidays, including President’s Day, Easter, Memorial Day and Fourth of July. These legislators routinely tour businesses in their districts, so let your desire to be seen known. Tell them your story. Make it personal. And, let us know when your U.S. member is visiting. We can provide additional guidance to make that visit a success. Send us your photos, too, so we can use them with our social media outreach.
- Give to our legislative affairs campaign. While we would encourage you to give $.25 per case, no amount is too small. To make your contribution, go to: amerciancraftspirits.org – FET DONATE NOW link.
Together with YOU (our members and supporters), ACSA hopes 2016 can be a historic year for advancing the interests of our craft distilling community. Please let us know of your efforts so we can unify the fight. And, as always, let us know if you have any questions. Your ACSA Legislative Affairs committee can be reached at: firstname.lastname@example.org (Committee Chairs: Ralph Erenzo, Tuthilltown Spirits Distillery 845.797.9010 and Nicole Austin, Kings County Distillery 315.415.8327)