The Craft Distillery FET Discount Bill and Why You Need to Know About It
All craft distillers…listen up. A new bill is on the table that could impact the way small craft distilleries do business in a landmark way. It’s called the Craft Distillery FET (Federal Excise Tax) Discount Bill and it pertains to all craft distilleries in the country.
Proposed in the bill is a substantial reduction in the Federal Excise Tax rate for the first 100,000 proof gallons removed from bond by any distillery. That breaks down to a vital sum saved for craft distilleries, equalizing for them the same lower tax rate that beer and wine distilleries have enjoyed for years.
Quoted by Ralph Erenzo, Distiller and Co-founder of Tuthilltown Spirits, “Small-scale beer producers pay 39% of the full federal excise tax that medium and large producers pay. Similarly, small producers of average-proof wine (<14% alcohol) pay 18% of the full rate. To put this in context, small beer producers pay $0.02 vs $0.05 in federal excise tax per 12 oz. can, while small wine producers pay $0.04 vs $0.21 per 750 ml bottle. By contrast, small spirits makers pay the full rate — $2.14 per 80-proof 750 ml bottle of spirits.”
What this proposed bill would do is to establish similar tax cuts for small spirit producers, of which there are currently over 400 today. Under these terms, it’s estimated craft distilleries collectively would pay a yearly average of about $270,000 instead of $1.35 million they’re reported to be now. Passing this bill equates to more jobs, an increased tax revenue, higher sales and a boost for the economy. Stated by Erenzo, “There is the important effect the rise in small distillery operations has on job creation nationwide. Craft distillers typically acquire their raw materials from local and regional farmers, using grains and fruits and herbs grown by local farmers. Distilleries draw tourists who spend money not only at the distillery but in the local restaurants and shops, contributing to the local economy.”
The bill is ready for introduction, but it needs your help. New York Democratic legislators are behind the bill with full support, and though Republican legislators are supportive, they are agreeing to party leadership ruling that they will not introduce any new bills for a reduction in revenue and in particular, for alcohol industry tax relief. Without a bi-partisan introduction, the bill’s progression has come to a halt.
A solution has come in the form of a non-partisan committee, made up of members of the American Craft Distillers Association (ACDA) who have taken up the initiative to see the bill passed. Currently, they are seeking support from the distilling community, urging everyone to seek out their local Congressman and Senators and bring to their attention the importance of this bill. Its importance cannot be stressed enough. Passing it would greatly benefit every craft distiller in the country, from those new to the business, to seasoned pros. Everyone who can, is encouraged to speak up and help to see it passed. It’s up to the crafters and distillers to see it happen. If we truly want to see craft distilleries flourish in the same way the craft brewing industry has, we must make sure this bill gets passed.
