State breweries would get big tax break under GOP proposal

WASHINGTON» They aren’t toasting yet, but Colorado beer-makers are abuzz about one piece of a tax package in Congress that would benefit brewers, especially the microbreweries that have become intrinsic to the state’s identity.

Under the Senate tax proposal, domestic breweries that produce less than 2 million barrels a year would see their taxes reduced from $7 to $3.50 per barrel for the first 60,000 barrels they produce per year.

If the measure passes — and that’s a big if — it would be a boon for Colorado’s nearly 350 breweries, the overwhelming majority of which fall into that category.

It’s a “huge deal,” said Andres Gil Zaldana, executive director of the Colorado Brewers Guild.

Notable too is how the beer provision found its way into the tax bill in the Senate.

For years, small beer-makers have clashed with their bigger rivals over tax policy — as neither side wanted to give the other an edge.

On this measure, however, they have joined forces because the package also includes a break for bigger breweries.

Any beer-maker — domestic or foreign, big or small — would see their taxes cut from $18 to $16 per barrel for the first 6 million barrels they produce or import. The $18 tax per barrel would apply to anything above that.

All the beer incentives would stay in place for two years, through the end of 2019.

“A big policy like this has to have the support of all the stakeholders in the industry to be successful,” said Jim McGreevy, president and CEO of the Beer Institute, a national trade association.

So what does this mean for beer drinkers?

Not much, at least in terms of price, said industry officials.

“We have never positioned this bill as a bill that would give better prices to consumers,” said Bob Pease, president and CEO of the Boulder-based Brewers Association.

Instead, he said, he expected brewers would invest any tax savings into their operations: improving equipment, hiring workers and ultimately making better beer.

“They are not going to take that money and pocket it,” he said. “They’re just not.”

Before any money changes hands, however, the tax bill first must make it through Congress — not an easy proposition.

On the Senate side, the measure has gotten the approval of the Finance Committee but still faces a full floor vote.

Most Senate Democrats, if not all, are expected to vote against it, and even some members of the Republican majority have expressed concern about the overall package.

There’s a challenge too on the other side of the Capitol.

The House already has passed its tax-cut plan, but that version didn’t include any incentives for the beer industry. If the Senate is able to pass a package with the beer tax break, the provision still must survive negotiations between the two chambers.

Beer industry advocates are confident, however, that they would be OK at that point because a majority of lawmakers in the House and Senate already back a separate, stand-alone bill that would accomplish much of what the beer provision aims to do.

“I don’t think there’s another bill that has that kind of bicameral, bipartisan support,” Pease said.

Its co-sponsors include all nine members of Colorado’s congressional delegation, including U.S. Sen. Michael Bennet.

The Democratic lawmaker recently took part in a congressional brewing competition where he partnered with a Colorado brewery to enter a beer called 53 Summit Stout. The name is an homage to one estimate of the number of Colorado fourteeners, or peaks that exceed 14,000 feet.

A Bennet aide said the senator continues to back the beer tax break but that his opinion of the underlying tax bill rests on much more than one policy change.

“While Michael supports this provision, he believes that tax reform should boost middle-class paychecks and not add to our debt,” said Samantha Slater, a Bennet spokeswoman, in a statement.