As you may have read overnight, lawmakers last night introduced a tax package that includes a one-year extension of the Craft Beverage Modernization and Tax Reform Act (CMBTRA), which was due to expire at the end of the year. It will now be part of a larger spending package to keep the government open through 2020. Though collectively our industry trade associations have been fighting for permanence, this one-year provision greatly helps our industry’s 2,000 craft spirits producers, whose tax payments would have increased by 400% come Jan. 1 when the temporary FET rate effected in 2018 of $2.70 reverts back up to $13.50 per proof gallon.
We are not celebrating yet, however, as this package must now go before the House this afternoon and the Senate later this week. We are hopeful the President then will sign this legislation into law. We need your continued help in spreading the word of this very real, very ominous threat to our industry. Please continue to communicate to House Members this morning and Senators that should a temporary relief not pass, here’s a quick look at what the immediate future holds as our community of craft distillers prepare for their January 15 tax payments:
According to an ACSA survey of 100 craft distilleries across the country:
- 100% of craft distillers report that the tax hike will negatively impact their small businesses.
- More than 50% of craft distillers will take action to immediately cut jobs.
- 15% of craft distillers will cut production.
- 12% of craft distillers will halt any expansion efforts.
- 13% of craft distillers will increase pricing.
- 11% will cancel or stop negotiating equipment purchases.
- 5% will cut grain purchases, creating a direct impact on U.S. agriculture.
- 5% will close their operations altogether.
This means that if this new tax package doesn’t move forward, we can expect 100 small businesses will be forced to close their doors almost immediately, as the first tax payment is due on January 15.
These numbers are grave, and the threat is real and imminent. We need your continued help. Please contact the members of your guild THIS MORNING and activate your community.