New Year, New Congress: An Update from the Hill
As of this writing, the 115th Congress will conclude on January 3, and a new Congress will be sworn in that day at 12 Noon. The election on November 6, 2018 certainly brought about significant changes that will impact the Federal Excise Tax (FET) debate in the next Congress.
There existed the potential for year-end tax legislation and ACSA was looking at this as a vehicle to extend our FET tax treatment. Our Association, along with the other major beer, wine, spirits and cider groups signed a letter to Senators McConnell (R-KY) and Schumer (D-NY) requesting that in any final tax bill, our FET issue be addressed. The lower FET for craft producers is set to expire at the end of 2019. It now appears, however, that with a few days left, the Congress will not address tax legislation in 2019, which means we will start anew in 2019.
The new Congress will look different next year. The Democrats picked up 40 House seats. They needed only 23 to gain a majority, so they will have a comfortable working majority in the House. The GOP picked up a net two Senate seats, so the new balance of power in the Senate will be 53 to 47 in favor of Republicans.
As for the House, one of those defeated on the GOP side was Rep. Erik Paulsen (R-MN) who was the lead sponsor of H.R. 747, the House bill that would permanently lower our FET from $13.50 to $2.70 for those producing less than 100,000 proof gallons. Ironically, his opponent, Dean Phillips, has had family in the distilling business. Rep. Kevin Brady (R-TX) will remain on the Ways and Means Committee, but he will not be the Chairman. He will have the title of Ranking Member.
The House Ways and Means Committee, which handles all tax bills, will have a new Chairman, Richard Neal (D-MA). Rep. Neal was a supporter and co-sponsor of HR. 747. Rep. Neal has served in the Congress for nearly three decades and is a well-liked and respected member. Rep. Ron Kind of Wisconsin was the lead Democrat on H.R. 747 in the last two Congresses. We expect that he will be the lead Democrat on our legislation in the next Congress. As a reminder, we had over 300 co-sponsors in the House last Congress and we will want to repeat that success. ACSA will be meeting with Rep. Kind and other key supporters in early January.
In the Senate, with the retirement of Senator Orin Hatch (R-UT), Senator Chuck Grassley of Iowa will take over as Chairman of the Senate Finance Committee. Senator Wyden of Oregon will continue as the top Democrat on Senate Finance. Senator Roy Blunt (R-MO) remains in the Senate and moves up in the GOP leadership ladder.
We are working with Senators Wyden and Blunt, Congressman Kind and others to have legislation re-introduced in the Senate and the House in January that would make our FET reduction permanent.
Looking ahead to 2019, our industry will again have to kick into high gear very quickly and engage in significant grass roots to get the Senate and House to support an extension of the lower FET for craft producers. While we feel good about our prospects, 2019 will be a year of working hard to ensure our success.