Redlands Daily Facts - Bill Aims to Reduce Federal Tax on Small Breweries

News Article

By Monica Rodriguez

Small brewers across the country could be granted a reduction in federal taxes, should a bill introduced into the 114th Congress this month gain support.

The Small Brewer Reinvestment and Expanding Workforce Act, or Small BREW Act, was introduced Jan. 8 by Rep. Erik Paulsen, R-Minnesota, and aims to reduce the federal excise tax for beer on small brewers, allowing them to use the savings to reinvest into the company.

If the Small BREW Act -- also known as HR 232 -- passed, it would provide a boost to craft brewers like Jason Stevens and Scott Lucas, co-founders of Sanctum Brewing Co. in Pomona. If the proposal became law, the businessmen would be able to hire more employees and reinvest more into the business, Stevens said.

"It would be so much better for us," Stevens said. He added that if they paid less taxes they would probably hire some full-time employees that could help with sales and other responsibilities.

As it is now, "we're here brewing and running the business," he said.

Having some full-time staff would allow Stevens and Lucas to dedicate more time to brewing their craft beers and to the development and perfecting of new recipes they can add to their menu, he said.

Currently, a small brewer producing less than 2 million barrels of beer annually pays about $7 per barrel for their first 60,000 barrels per year.

Beyond 60,000 barrels, the tax increases to $18 per barrel.

The legislation would reduce the tax to $3.50 for each of the first 60,000 barrels and to $16 on each of the first 1.9 million barrels, according to the Act.

The Act would also increase the 2 million barrel cap to 6 million barrels.

It has been co-sponsored by other representatives on both sides of the aisle including recently elected Rep. Pete Aguilar, whose district spans from Upland to Redlands.

"Obviously I want to do things that are helpful to this region and to our local small businesses so this was a great opportunity to do that," said Aguilar, D-Rancho Cucamonga. "There are thousands of craft breweries around the nation who can use the help. They're creating jobs and helping grow our economy every day. I think it's only fair that the federal government recognize that."

Like Sanctum Brewing Co., several small breweries have taken root in the Inland Empire, including Chino Valley Brewery, Claremont Craft Ales, Dale Bros. Brewery, I & I Brewing and Redlands-based Hangar 24 Craft Brewery.

In Yucaipa, Brew Rebellion brews small batches of beer, but brewery co-owner Ed Parker said any reduction will help.

"Out of every dollar federal or state or local agencies takes out of a business in taxes, is money that goes for employees, it goes for rent, for benefits-- so any time they can reduce that amount of money that they take right off the top, it's going to benefit the small business," he said.

Cook said his brewery pays about $500,000 annually in the excise tax, which he says is among their top three expenses.

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