Pintful

Pintful: Competing bills jeopardize possible tax break for brewers

May 21, 2013 

  • What’s On Tap Weaver Street Market Anniversary Beer Tasting

    4-6 p.m. Saturday in Hillsborough

    To celebrate its 25th anniversary, Weaver Street Market teamed up with local breweries to create limited-edition beers for its parties. This Saturday’s event at the Hillsborough location will feature 22-ounce bottles of a Lonerider Smoked Dry Irish Stout dubbed "Weaver Trail." Info: facebook.com/weaverstreet

    Asheville Beer Week

    Saturday-June 1 in Asheville

    One of the premier beer showcases in North Carolina starts Memorial Day weekend and lasts a week with beer dinners, special events and tastings. It culminates in the Beer City Festival, a five-hour beer tasting event on June 1. Info: ashevillebeerweek.com

    List your beer event here!

    Email Pintful columnist John Frank at jfrank@newsobserver.com.

Unlike the beer legislation in North Carolina, the effort in the nation’s capital to tweak federal law looks as opaque as a rich stout.

The beer industry is asking Congress for a big tax break that it says would lead to expansion and more jobs. But brewers large and small don’t seem to agree on how much each should pay, with the Beer Institute and the Brewers Association pitching different bills to cut federal excise taxes.

The split interests mean it is it less likely either bill will make significant progress and North Carolina breweries could stand to lose.

(By contrast, the two beer bills the N.C. General Assembly face a clearer outlook. A bill to allow beer growler fills at more retailers and another to permit in-stand beer sales at most professional stadiums made the crossover deadline and now await state Senate action.)

The divide at the national level – unfortunately – reared its head during American Craft Beer Week, a time the craft industry celebrates its camaraderie and growing popularity.

The Beer Institute, a trade association that represents big companies like Coors and Anheuser-Busch, as well as importers and some smaller brewers, traveled to Capitol Hill last week to tout its Brewers Excise and Economic Relief Act of 2013.

The BEER Act is the foil to the Small Brewer Reinvestment and Expanding Workforce legislation, or Small Brew Act, which targets tax breaks only to regional and micro-breweries. The latter is backed by the Brewers Association, a group that represents craft brewers.

All commercial beer companies pay a federal excise tax on each barrel, or 31-gallons, they produce. For small brewers, the tax is $7 on the first 60,000 barrels and $18 for each subsequent barrel. For big brewers – defined as those making more than 2 million barrels a year – it’s $18 for every barrel.

The BEER Act cuts the tax for big brewers to $9 a barrel. Small brewers who make between 60,000 and two million barrels would pay $9 per-barrel tax and those producing 15,001 and 60,000 barrels would pay $3.50. Microbreweries making less than 15,000 would pay no tax.

Under the more modest Small BREW Act, the tax on the first 60,000 barrels would get cut in half to $3.50. Between 60,000 and two million barrels the bill trims the tax to $16 each. Beyond two million, the tax remains the same at $18.

For North Carolina breweries, the BEER Act proposed by the big-beer trade group actually appears to be a better deal.

Among native breweries, Highland Brewing in Asheville is the largest, producing 30,000 barrels. Most North Carolina brewers produce less than 15,000, so taxes would vanish. The two big brewers to add operations in the state, New Belgium and Sierra Nevada, whose production approaches one million barrels, would also see big breaks.

But the cost of the legislation may make it difficult to pass through Congress and impede the more targeted efforts from the Brewers Association.

The group isn’t trashing the competing legislation but believes the tax breaks should target the smallest producers. U.S. Rep. Patrick McHenry, a western North Carolina Republican, is a co-sponsor of the Small Brew Act and member of the House Small Brewers Caucus. “What they want is a small amount of relief,” he recently told News 14, a statewide cable news channel. “They don’t want any preferential treatment. What they want is the ability to get up and running.”

What I’m drinking

Olde Hickory Brewery took its Redeemer imperial India pale ale and aged it on oak chips. I thought they ruined a good thing, but after a taste from one of the rare kegs, I’m becoming a believer.

The mellow oak taste doesn’t dilute the hop power in this 10 percent ABV beer, it only adds a different complexity. I tasted from a keg at Good Bottle Co. in Charlotte last weekend, but keep an eye out for local taps.

Contact John at 919-829-4698 or jfrank@newsobserver.com. On Twitter @ByJohnFrank.

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