Small breweries may get tax cut

  • Chris Sellers, brewer at the People’s Pint brewery on Hope Street, mixes up a batch of double IPA. Recorder File Photo/Paul Franz

  • Recorder File PhotoA flight of local beer.

For The Recorder
Published: 11/22/2017 7:36:06 PM

The most recent version of the U.S. Senate’s tax reform bill contains a very specific tax cut that would directly benefit breweries in western Massachusetts.

Local brewers’ reactions to this development, however, are decidedly mixed.

Mike Yates, the head brewer at Building 8 Brewing in Florence, said the excise tax cut on beer would help the brewery’s business.

“That’s real money,” he said, as the latest batch of IPA was canned and barreled Monday. “Everything adds up.”

Chris Sellers, head brewer at The People’s Pint in Greenfield, agreed that the brewery, which brews about 1,000 barrels a year, would benefit from the change.

“It would be significant savings,” he said, of the excise tax cut.

However, speaking for himself, he said the tax cut would not be worth it if it was attached to some of the other provisions in the tax bill.

“Not at the cost … of a really conservative tax plan,” he said, citing the significant tax cut the bill promises to large corporations.

As part of amendments to the “Tax Cuts and Jobs Act” in the Senate Finance Committee, a reduction in the federal excise tax on beer was added to the lengthy bill.

Should it become law, this would reduce the excise tax on a brewer’s or importer’s first 6 million barrels a year from $18 a barrel to $16 a barrel. The excise tax comes into effect after beer is removed from a brewery for consumption or sale.

For small breweries, defined as those that brew fewer than 2 million barrels of beer a year, the first 60,000 barrels of beer produced each calendar year carry a $7 excise tax. The legislation in the Senate bill would drop this tax to $3.50.

The bill also contains tax reductions for spirit and wine producers. The proposal would expire after Dec. 31, 2019.

This year, Building 8 made 1,500 barrels of beer, and Yates said that the brewery will be making 2,200 barrels next year. He said that he believes that there are only a few breweries in Massachusetts that make more than 60,000 barrels a year, and he couldn’t think of any in western Massachusetts that make more than that.

Yates also said he wasn’t aware of many other provisions of the tax bill.

One element of the bill is that it would eliminate the nation’s graduated corporate tax structure, which has a maximum rate of 35 percent, replacing it with a 20 percent flat rate.

Ben Anhalt, one of the partners at Element Brewing Co. in Millers Falls, said the excise tax cut on beer wouldn’t be significant for his business.

“It’s not gonna do anything really for our bottom line,” he said.

Anhalt said Element brews about 800 barrels of beer a year, and he thinks the excise tax reduction would be more significant for higher-volume producers.

He also noted that the tax is “already pretty darn low.”

U.S. Rep. James McGovern, D-Worcester, has advocated for these same excise tax reductions in his advocacy for H.R. 747, the Promote Craft Beverage Modernization and Tax Reform Act of 2017.

However, McGovern’s office said the congressman would not be supporting the Senate bill, although the office did cite the addition as a positive development.

“Congressman McGovern would welcome a genuine effort to pass bipartisan tax reform, but the current bill is just another shameless giveaway to billionaires and corporations at the expense of hardworking families,” said a representative for the congressman.

Greenfield Recorder

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