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Monday, 14 September 2015 15:40

Distillery excise tax reform to benefit small West Michigan distillers

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U.S. Sen. Gary Peters (D-MI) stands between Long Road Distillers co-owners Jon O'Conner and Kyle Van Strien U.S. Sen. Gary Peters (D-MI) stands between Long Road Distillers co-owners Jon O'Conner and Kyle Van Strien PHOTO: John Wiegand

Pending legislation could help level the playing field for craft distilleries by reducing the excise tax that a distiller must pay on its spirits.

The Distillery Excise Tax Reform Act (DETRA) aims to significantly cut the current excise tax rate in order to make small distillers more competitive, as well as spur community investment and job creation.

“That reduction will mean more capital investment and will mean more jobs,” said U.S. Sen. Gary Peters (D-MI), during a tour, today, of Grand Rapids-based Long Road Distillers LLC.
Sen. Peters co-introduced the legislation in May 2015 along with Dan Sullivan (R-AK) and Kirsten Gillibrand (D-NY).

The new legislation will lower the excise tax from $13.50 per proof gallon to $2.70 per proof gallon — defined as one liquid gallon of spirits at 50 percent alcohol by volume at 60 degrees fahrenheit — for the first 100,000 proof gallons produced by a distillery in a year.

Additionally, the legislation would also make craft distillers more competitive in the craft beverage landscape. Unlike other craft beverage producers, distillers must pay the same excise tax as large, national producers such as Jim Beam.

“It’s a parity move, not an advantage,” said Kyle Van Strein, co-founder of Long Road.

For Long Road, the new excise tax would save the distillery approximately $150,000 per year, Van Strein said. Long Road plans to produce 10,000 cases — roughly 20,000 proof gallons — of spirits by next year.

DETRA is one part of legislative push to modernize antiquated laws for craft beverage producers. The act’s excise tax reductions for craft spirits was incorporated into the sweeping Craft Beverage Modernization and Tax Reform Act (CBMTA). The CBMTA addresses a litany of taxation and bureaucratic procedures hindering craft brewers, cider makers, wineries and distillers.

The CMBTA lowers tax thresholds for brewers and raises both the alcohol by volume and carbonation limits of cider, avoiding the beverage being taxed at the higher rate of specialty wine or champagne.

The larger CMBTA bill will also address the amount of bureaucracy craft beverage producers encounter throughout the production process. In particular, the legislation would simplify standards for ingredients and modernize the U.S. Alcohol and Tobacco Tax and Trade Bureau (TTB).

Read 2599 times Last modified on Monday, 28 September 2015 10:50

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