Tax Plan Includes Cuts to Federal Excise Tax

The United States Capitol Building.
The United States Capitol Building

One of the few things Democrats and Republicans on the Senate Finance Committee can agree on is cutting the Federal Excise Tax (FET) that distilleries, wineries and breweries of all sizes must pay.

The Senate committee included a two-year cut to the FET in the tax plan they are debating. The panel is expected to vote on the plan on Friday. But the House of Representatives, which is promising a vote on its tax plan on Thursday, has no such provision regarding the FET. One observer who has been closely following the legislation said the Senate Committee’s move might put pressure on the House to go along with the cut.

Republicans, who control both congressional chambers, will seek to reconcile the two tax plans sometime after Thanksgiving and before Christmas.

“We commend 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,” said Kraig Naasz, president and chief executive officer of the Distilled Spirits Council.

A letter was sent by a coalition of groups supporting the tax cut to Senator Orrin Hatch, Republican of Utah, who chairs the finance committee. It noted every congressional district in the United States includes a brewery, winery, distillery, importer, or industry supplier.

Some 54% of the price of a typical bottle of spirits comes from taxes and fees, according to the Council.

The current FET levied on distilled spirits is $13.50 per proof gallon, and the distilled spirits sector paid more than $5.5. billion in FET in 2016, the Council said. They, along with the Beer Institute, Brewers Association, Wine Institute, WineAmerica and the American Craft Spirits Association are seeking to cut the FET to $2.70 per proof gallon for the first 100,000 proof gallons—or about the same price as a gallon of gasoline.

Above 100,000 proof gallons that rate would rise to $13.34 for the next 22.13 million proof gallons. Above that level, the FET would remain $13.50.

If the cut to the FET survives, it would mark the first time that taxes on distilled spirits were reduced since the Civil War.

Published on November 15, 2017
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