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DISCUS Seeks to Cut Excise Taxes

What does it take in these days of rancor to pass a piece of legislation that enjoys wide bipartisan support in both the House of Representatives and the Senate? The Distilled Spirits Council (DISCUS) is hoping that a flood of phone calls might do the trick.

Kevin Brady, the House Ways and Means Chairman and Republican of Texas, is expected to introduce an initial tax reform bill on Thursday. That is the same day DISCUS is urging its members to call their members of Congress asking to pass the Craft Beverage Modernization and Tax Reform Act (H.R. 747/S.236) as part of the tax reform package.

The Act has 52 sponsors in the U.S. Senate and 285 in the House.

First Tax Cut Since Civil War

DISCUS, working with the Beer Institute, Wine Institute, American Craft Spirits Association, WineAmerica and Brewers Association, has been lobbying to cut tax rates for both domestic producers and importers. This would mark the first time that taxes on distilled spirits were reduced since the Civil War.

Currently, the Federal Excise Tax (FET) levied on distilled spirits is $13.50 per proof gallon. The distilled spirits sector paid more than $5.5. billion in FET in 2016.

Industry groups argue that the tax cuts would benefit the nation’s growing distilling sector, along with hospitality, agriculture and tourism by creating new jobs and economic development.

Pat Toomey, Pennsylvania’s junior senator, a first-term Republican up for re-election next year, can expect a call from Robert Cassell, owner of Philadelphia’s New Liberty Distillery, one of the first to open in the Commonwealth. Now, there are 82 distilleries.

“Over the years on this issue,” Cassell said, “I have met with his (Toomey’s) staff on it. It will not be my first time on this issue.” Toomey is not one of the 52 senators who are co-sponsoring the measure.

Cassell said that most craft distilleries, counting full-time and part-time help, have between 15 and 25 people working for them. “You times that by 82 and that’s a lot of jobs in your state,” he said, adding that the distilleries use grains from local farmers and hire those small companies that build barrels and install stills and plumbing.

“It all adds up,” Cassell said.

Split Support Among Florida Reps

In Florida, Philip McDaniel, CEO of St. Augustine Distillery, said his congressman, Republican John Rutherford was one of the bill’s co-sponsors in the House, as were fellow Republicans Vern Buchanan and Carlos Curbelo. However, his senators, Democrat Bill Nelson and Republican Marco Rubio have withheld support for the measure in the Senate.

McDaniel said he would be speaking with all of his elected representatives. The Senate version of the bill was sponsored by Oregon Democrat Ron Wyden and is now with the Senate Committee on Finance. Nelson is a member of that Senate committee as is Pennsylvania’s Toomey.

“There are more than 35 distilleries in Florida. We (St. Augustine Distillery) have over a $3 million investment in plant equipment, “McDaniel said. If the excise tax is cut “it’s going to allow us to put more revenues into the growth of our business; putting more into the plant, hiring more people and buying more barrels.”