By a vote of 51–49, the U.S. Senate passed a comprehensive tax bill in the wee hours of Saturday morning that includes a measure to slash the Federal Excise Tax (FET) that distilleries, wineries and breweries must pay.
The “Craft Beverage Modernization and Tax Reform Act” (H.R. 747/S.236), had the bi-partisan backing of 298 members of Congress and 55 senators when it was added to the 479-page tax bill two weeks ago. It covers both domestic and imported spirits, wines and beer.
“The Distilled Spirits Council commends Senate Majority Leader Mitch McConnell, Finance Committee Chairman Orrin Hatch and their colleagues for their efforts to enact comprehensive tax reform,” Distilled Spirits Council President and CEO Kraig R. Naasz said in a statement released Saturday. “It will enable producers of distilled spirits to invest back in their businesses and communities across the United States.
The $1.5 trillion Senate Republican tax plan now must be reconciled with the House version. That committee is expected to meet later Monday to begin hammering out the differences. Some observers expect the resulting bill, which must be passed by both Houses, to be on the president’s desk before the December 12 Senate seat special election in Alabama.
According to the Council, 54% of the price of a typical bottle of distilled spirits is currently consumed by taxes and fees. The new bill cuts the current federal excise tax on spirits from $13.50 per proof gallon to $2.70 per proof gallon for the first 100,000 proof gallons of distilled spirits produced or imported annually. After the first 100,000 gallons, the rate rises to $13.34 and then $13.50 per proof gallon.
It is the first tax cut on distilled spirits since the Civil War. The Council, Beer Institute, Brewers Association, Wine Institute, WineAmerica and the American Craft Spirits Association all supported the measure.