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Congress Considering Lower Excise Taxes for Small Breweries
By Daniel Garner on March 11, 2013 at 6:00 AM

As small local breweries continue growing in popularity throughout the nation, Congress is considering previously introduced legislation that would significantly reduce excise tax rates for small brewers. The Small Brew Act (H.R. 494, http://www.govtrack.us/congress/bills/113/hr494) would amend Internal Revenue Code and reduce excise tax rates by 50% on the first 60,000 barrels for brewers producing under 6 million total barrels per year, from $7.00/barrel to only $3.50/barrel. After that, the excise tax would be a flat $16.00/barrel, up to a total of 2 million barrels.

Representative Jim Gerlach (R-PA6) first introduced the bill in March 2011. Although it (and a nearly identical Senate bill authored by John Kerry) had relatively wide support from both Democrats and Republicans at the time with a number of high profile co-sponsors, it eventually died in committee. Now, Rep. Gerlach has again introduced the bill, and initial support from both parties appears reasonably strong. As of March 8, 2013, 45 different representatives have joined as co-sponsors, including 23 Republicans and 22 Democrats.

Should Congress eventually enact the Small Brew Act, local breweries throughout the country could see substantial benefit from this act. Locally in St. Louis, home to Budweiser, the self-proclaimed (and widely accepted) King of Beers, the bill is also likely to enjoy widespread support. Although Budweiser (A-B InBev) will not qualify, many of the dozens of Missouri microbrewers and distributors would likely be eligible for the reduced excise tax rate and accompanying savings.

If you are interested in more information about the Small Brew Act, please contact a member of our Franchise & Distribution Practice Group.

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