The Senate Finance Committee has included in the provisions of the draft Craft Beverage Modernization and Tax Reform Act (CBMTRA) to reduce the tax burden on US domestic brewers and distillers for two years even as it seeks a permanent tax cut for wine producers in the bill.
According to the news on the proposals sourced by BRTnews.ng from Tax-news.com, the new Senate tax proposal hinged on an amendment offered by Senator Rob Portman (R-OH) were incorporated into the earlier proposals contained in the Craft Beverage Modernization and Tax Reform Act (CBMTRA). The provisions are understood to have broad bipartisan support and many of them would expire on December 31, 2019.
Specifically, the proposal lowers the rate of tax on beer to USD16 per barrel on the first six million barrels brewed by a brewer or imported by an importer, with the USD18 rate remaining in place above this volume. For producers that produce fewer than two million barrels of beer during a calendar year, the provisions will lower the FET rate to USD3.50 from USD7 for the first 60,000 barrels domestically produced, and USD16 per barrel on any further barrels produced.
In addition, the draft bill also seeks to reduce the FET on distilled spirits from USD13.50 to USD2.70 for the first 100,000 gallons produced, and to USD13.34 on the next 22.13m gallons.
According to the proposal in the CBMTRA for wine-makers, the credit against the wine excise tax for small domestic producers would be modified and lead to the removal of the 250,000 wine gallon domestic production limitation. By this, when enacted into law, the bill will open up the credit to all wine producers and importers, and add sparkling wine producers and importers to its scope.
The draft legislation also seeks to increase the excise tax credit to USD1 per wine gallon for the first 30,000 gallons produced, 90 cents per gallon for the next 100,000, and 53.5 cents per wine gallon for the next 620,000. There is no phase-out of this credit.
Reacting to the proposals in the bill, industry associations have lauded the provisions’ inclusion in the Senate proposal.
Commenting, the Kraig R Naasz, Chief Executive Officer of the Distilled Spirits Council, said: “We commend Senator Portman and the Senate Finance Committee for recognizing the excessive tax burden faced by the more than 1,200 operating distilleries nationwide, as well as the important role distilleries of all sizes, play in generating jobs, supporting agriculture, and boosting tourism.
“The distilled spirits sector paid over USD5.5bn in FET in 2016 alone. This is a unique and excessive tax burden on the industry”, Naasz added.
Also, Margie Lehrman, Executive Director of the American Craft Spirits Association, enthused that “the burdensome FET is a substantial impediment to economic growth in the craft spirits industry, but this bipartisan commitment to ‘fixing’ this injustice is promising”, adding that “this is a clear ‘win’ for American economic growth.”
Meanwhile, it is reported further that some European Union (EU) and others countries with huge trade and investment relations with the US are beginning to weigh the implications of the current tax reforms for their economies.
As expected, the tax reform is bound to not only have remarkable effects on the US economy but also affect, in varied ways, the global economic order as US and foreign investors shift more investments to the country.
For instance, it is further reported that Ireland is one of the countries that are already becoming worried about the impact of the proposed corporate tax cuts and foreign dividend exemption in the US.