Small BREW Act will Save Small Brewers Up to 50 Percent Per Barrel Manufactured; Expected to Inject $183 Million into Economy in First Year
CHICAGO–(ENEWSPF)–April 24, 2014. U.S. Sen. Mark Kirk (R-Ill.) yesterday joined with Josh Deth, Managing Partner of Revolution Brewing—a Chicago-based craft brewing company—to announce his support for the Small Brewer Reinvestment and Expanding Workforce Act—the Small BREW Act—a measure to reduce excise taxes on beer brewers who produce fewer than 6 million barrels per year.
Currently, brewers pay an excise tax of approximately $18 on each barrel of beer brewed; small brewers—those who produce fewer than 2 million barrels per year—pay a reduced rate of $7 per barrel for the first 60,000 barrels brewed. The Small BREW Act would boost small brewers by reducing excise taxes on the first 60,000 barrels produced to just $3.50 per barrel and $16 per barrel on additional barrels up to 2 million.
Sen. Kirk toured Revolution Brewing’s Production Brewery with Deth and sampled Revolution’s “Eugene Porter,” one of Revolution’s over 50 varieties of beer.
An economic impact study by Dr. John Friedman at Harvard University found that the bill would generate $183.1 million in economic activity in the first year and almost $1.04 billion over five years and would also create nearly 5,230 jobs in just the first year.
As of 2013, Illinois is home to 67 craft breweries, employing 2,847 workers.
“The Small BREW Act represents an opportunity to unleash tremendous potential for entrepreneurship,” Sen. Kirk said. “Lowering these tax rates for small breweries will help grow small business and make burgeoning entrepreneurs more competitive.”
The small brewer threshold and tax rate were established in 1976 and have never been updated. Since then, the annual production of America’s largest brewery increased from 45 million barrels to 105 million barrels. Raising the ceiling that defines small breweries from 2 million barrels to 6 million barrels more accurately reflects the intent of the original differentiation between large and small brewers in the U.S.
“This is an important bill for cash-strapped Illinois,” said Josh Deth, who likes to call himself “Chairman of the Party” for Revolution Brewing. “The incentives would help small breweries like Revolution Brewing build business and boost production, which would in turn inject millions into the economy.”
The same Harvard study estimates an annual job growth of 400 per year, after the initial boost of 5,230 in the first year. Each new job would cost just $3,300 in foregone tax revenue from the first year.
While it is estimated that the Federal government would forego approximately $67 million in revenue as a result of the Small BREW Act, but would make an additional $49.1 million in new payroll and income taxes, along with $1.1 million in excise taxes on the additional craft beer sales.
“This is another case where reducing taxes will provide a clear boost to job growth and to the economy,” Sen. Kirk said. “I am proud to join a bipartisan group of Senators and House Members in support of this bill.”
Full text of the Small BREW Act – S. 917 – can be found here.