SCHUMER: PRICE OF NY CRAFT BEER COULD RISE DRAMATICALLY AFTER LOSS OF TAX CREDIT FOR NY CRAFT BREWERIES; SCHUMER, BIPARTISAN LEGISLATORS OFFER PLAN TO STOP INCREASE AND KEEP BURGEONING INDUSTRY GROWING

FOR IMMEDIATE RELEASE: CONTACTS: Matt House (Schumer), 202-360-8132

May 06, 2012

SCHUMER: PRICE OF NY CRAFT BEER COULD RISE DRAMATICALLY AFTER LOSS OF TAX CREDIT FOR NY CRAFT BREWERIES; SCHUMER, BIPARTISAN LEGISLATORS OFFER PLAN TO STOP INCREASE AND KEEP BURGEONING INDUSTRY GROWING

Craft Beer Industry in New York Becoming More Popular by the Day, But Popular Beers Like Brooklyn Lager, Captain Lawrence, and Blue Point Could Get Clobbered by Court Ruling

Schumer, Zeldin, Squadron, Lentol Offer Bipartisan Plan to Undue Impacts of Ruling

United States Senator Charles E. Schumer, NY State Senators Lee Zeldin and Daniel Squadron, and NY State Assemblyman Joe Lentol, joined by representatives from the Brooklyn Brewery and Captain Lawrence Brewery in Westchester, announced a two-step plan to ensure that the loss of a New York State tax credit to local craft breweries doesn’t raise the cost of craft brews served at local pubs and sold at New York stores, and doesn’t impede the growth of this burgeoning New York industry. Last month, the New York State Supreme Court ruled in favor of an out-of-state brewer and struck down a state excise tax exemption offered to in-state breweries that was designed to help the newly established industry expand and create jobs. As a result of the court decision, a New York State brew pub that produces 100,000 barrels of beer a year could see a cost increase of close to half a million dollars, that could significantly increase the cost of New York craft beer both at stores and in pubs.

Last month the New York State Supreme Court ruled in Shelton v. NYS Liquor Authority & NYS Department of Taxation and Finance that a state excise tax exemption for New York based small breweries was unconstitutional. The tax benefit applied to the first 200,000 barrels of beer produced by a New York brewer and provided an exemption from a 14 cent per gallon state tax and an additional 12 cent per gallon tax for beer sold in New York City. Brewers were also exempted from an additional $150 registration fee required for every individual variety of beer brewed and sold in New York. The loss of this tax break will result in a cost of up to $434,000 for a New York craft brewery that produces 100,000 barrels of beer per year. In order to support the growth of New York’s craft brew industry and to ensure that these new costs don’t hit consumers, Schumer, Zeldin, Squadron, and Lentol announced a joint federal-state plan to offset the cost increases by reducing the federal excise tax and introducing a production tax credit at the state level.

Schumer is pushing for passage of the federal Brewer’s Employment and Excise Tax Relief Act (BEER Act, S 534) that would cut in half the federal tax on small breweries, helping small brewers across New York reinvest in their business, hire new employees and keep the retail cost of New York produced beer down. Currently, brewers pay a $7 federal excise tax for the first 60,000 barrels they brew per year. Under the BEER Act, that rate is slashed to $3.50 per barrel, resulting in potential savings of $210,000 per year for the brewery. The bill also cuts the tax by $2 on the next 1,940,000 barrels produced, resulting in potential savings of $3,880,000 each year. This totals over $4 million in potential annual savings for brewers. Allowing small breweries to reinvest in their companies is good for the surrounding communities, as many build state-of-the-art structures or renovate existing buildings, preventing blight and creating good-paying jobs.

“New York’s craft brew industry is not just about good spirits, it’s about good jobs,” said Senator Schumer. “This legislation will go a long way toward covering the financial impacts of the repeal of this important state tax benefit and will allow small breweries to grow, expand, and serve their brew at a price that affordable to all New Yorkers. It’s something we can all raise a glass to.”

At the same time, a bipartisan group of New York lawmakers, including State Senators Lee Zeldin, Daniel Squadron and Assemblyman Joe Lentol are introducing legislation in Albany that would provide state-based tax credits for the production of New York State craft brews in order to offset the financial impact of the loss of the state excise tax exemption. The State Senate and State Assembly bills would provide a 14 cents per gallon production tax credit for up to the first 6,200,000 gallons of beer produced (200,000 barrels) by a New York State licensed brewery in a taxable year.

“Across Long Island, and all throughout New York, the craft brewing industry has thrived and expanded over the past decade. As a result of a recent Supreme Court ruling, an unexpected and significant tax burden has been recently placed on New York brewers. This decision unfortunately struck down an important excise tax exemption,” said State Senator Lee Zeldin. “For the economic boom in this industry to continue, we must take action in response to this recent court case. Our bi-partisan legislative efforts would give New York brewers a production credit of 14 cents per gallon of beer produced in New York for the first 6.2 million gallons produced in the taxable year. I thank Senator Schumer who, as New York’s senior U.S. Senator, has taken the important initiative of introducing legislation in the US Senate to also address this issue. I proudly welcome bipartisan support and assistance in both the State Senate and Assembly and will be working very closely with them, our Governor and Senator Schumer to protect New York’s valuable breweries.”

“From the good jobs they create to the great beer they produce, New York’s brewers are key to New York’s economy,” said Senator Daniel Squadron. “An Empire State Beer Production Credit will let our small brewers keep growing, while keeping their beers affordable. That’s more jobs and better options at the tap, which is something we should all toast to. Thank you to Senator Schumer for leading the charge on the federal level and I look forward to pushing with my colleagues on the state level.”

“New York State small brewers have spurred economic growth across state. Whether in Brooklyn, Rochester, Albany, Utica or Binghamton, small breweries have survived and grown this craft over the past ten years,” said Assemblyman Lentol, whose district is home to the Brooklyn Brewery. “Jobs of all kinds have been created as New York has rediscovered its beer production history. What’s wonderful about this industry is that jobs of all kinds have been developed – from highly specialized beer production tradesmen to distribution, transportation and retail positions. We must enact a beer production tax credit to offset the devastating court decision issued this week so that New York breweries can continue to grow.”

“The loss of the small brewer tax exemption was a big blow to the Brooklyn Brewery. It will cost us a half million dollars in the next year,” said Steve Hindy, owner of the Brooklyn Brewery. “We greatly appreciate the support of Senator Schumer and our state and city elected officials in trying to find a way to mitigate the impact.”

According to the New York State Brewer’s Association, in New York City, 5 breweries brewed 132,073 barrels of beer last year, and there are plans to open 5 new breweries. On Long Island, 10 breweries brewed 54,122 barrels of beer last year, and there are plans to open 5 new breweries. And in the Hudson Valley, 7 breweries brewed 11,895 barrels of beer last year, and there are plans to open 7 new breweries.

In New York, the beer industry directly supports approximately 8,000 jobs through brewing and distribution, and nearly 60,000 jobs overall when retail sales are factored in. These jobs paid nearly $1.7 billion in wages in 2008, and accounted for almost $5 billion in economic activity. A Harvard study of the proposal predicts that passage of the federal legislation would increase economic activity in the small brewery sector by over $115 million in the first year, and by over $733 million over the first five years. Every dollar saved by cutting the excise tax would result in nearly $11 dollars in economic activity, providing an immediate and substantial boost to the economy. According to the study, the proposal would generate over 2,700 new jobs in the first year, and an additional 375 jobs per year for the next four years. Schumer has also been pushing an “I Love NY Brew” campaign to market New York’s growing craft brewery industry to convenience stores, restaurants, and local pubs throughout the state.

Bazzo 05/07/12