NAMPA — The federal government recently gave brewers some tax relief. For fans of locally brewed beer, however, it likely won’t mean more beer or lower prices.
A section of the newly passed Tax Cuts and Jobs Act cuts federal excise taxes on beer, wine and distilled spirits sold over the next two years. The tax credits apply to products sold in calendar years 2018 and 2019 regardless of when they were produced, according to the Alcohol and Tobacco Tax and Trade Bureau.
The new tax plan also provides some monetary relief for winemakers. The excise tax burden will be reduced by 55 to 70 percent for small to medium wineries, according to the Wine Institute.
The two-year tax relief isn’t expected to lead to a spike in wine or beer production or to change prices much.
“It’s not going to impact price of wines,” said Gregg Alger, owner of Huston Vineyards in Caldwell.
Factors such as cost of fruit and production-related costs impact wine prices more than taxes do, he said.
The tax break, while certainly welcome, Alger said, is “rather small in the overall scope of things.” Because the break is set to expire in 2019, Alger said his goal as a local winemaker would be to initiate conversations at the state level about future prospects of such incentives.
Alger said his plan is to use the tax savings to reinvest in his winery’s infrastructure.
The tax break will not necessarily mean more beer, either, Brewers Association President and CEO Bob Pease said. It could mean small brewers will invest more into their plants, possibly even increasing wages for employees, he said.
The association had been lobbying for this tax break for about nine years in the interest of small craft brewers, Pease said. Next, the association would like to see the tax cuts — set to expire in December 2019 — made permanent by law, he said
Pease said the legislation was also supported by barley growers.
Jerry Fergusson, owner of Crescent Brewery in Nampa, said the relief from the federal government is welcomed, but he hopes the state would ease the tax burden, too.
“People don’t realize how much taxes we pay,” Fergusson said. “We pay a lot.”
DETAILS OF THE PLAN
The new tax plan cuts the federal excise tax in half on the first 60,000 barrels produced by small craft brewers that brew fewer than 2 million barrels annually.
For large producers, the excise tax on the first 6 million barrels produced is reduced by $2 a barrel, after which, the rate remains fixed at the current $18 a barrel rate.
The new law also allows transfer of beer between bonded facilities without tax liability, meaning small unaffiliated brewers will have the flexibility to collaborate on new beers without facing a tax liability, according to the Brewers Association for small and independent craft brewers.