Small BREW Act v. BEER Act – Competing Interests of Craft and Macro Brewers on Federal Beer Excise Taxes

Craft brewers and macro brewers are making separate pleas to Congress for relief on federal beer excise taxes. Currently, craft brewers (producers up to 2 million barrels a year) pay $7 of taxes on each on the first 60,000 barrels and $18 of taxes on each subsequent barrel while macro brewers (producers over 2 million barrels a year) pay the full $18 of taxes per barrel on all barrels produced.

The Small BREW Act proposes a $3.50 tax on the first 60,000 barrels, a $16 tax on barrels between 60,001 and 2 million and an $18 tax on each barrel thereafter. The Small BREW Act would only apply to domestic producers who produce 6,000,000 barrels or less.

A competing proposal, the BEER Act , proposes no tax on the first 7,143 barrels, a $3.50 tax on barrels between 7,144 and 60,000, a $16 tax on barrels between 60,001 and 2 million and an $18 tax on each barrel thereafter. The BEER Act would apply to all brewers and importers.

While both acts propose to reduce excise taxes, craft brewers generally favor the Small BREW Act because it increases their margins and allows them to invest profits back into their businesses. Craft brewers criticize the BEER Act because it provides tax relief to importers and companies which may not directly invest the savings back into domestic operations and jobs.

Macro brewers generally support the BEER Act because they feel it helps all brewers (no limit on the barrels a brewer can produce to qualify for the tax rates) by not only reducing excise taxes, but eliminating taxes for producers of fewer than 7,143 barrels per year (which includes the majority of beer producers in the United States).

Expect a heated debate on Capitol Hill over the next couple of months to see who wins the day on federal beer excise taxes.