Pikes Pub: Brewer's Association, for one, loves the new tax overhaul

Stephanie Earls photographed Wednesday, September 4, 2013. Photo by Mark Reis, The Gazette

The new tax overhaul has many of us scratching our heads over how things will play out on a personal level, but the nonprofit group that champions small and independent craft brewers cheers the sweeping changes.

The new legislation rolls back excise tax rates that were instituted on beer in 1862 to help pay for the Civil War.

"A lot has changed since 1862," said Bob Pease, CEO of the Boulder-based Brewers Association.

A small brewer now pays an excise tax of $7 per barrel - the 31-gallon unit of measure in the beer world - up to 60,000 barrels. The recalibrated tax structure halves that rate to $3.50 per barrel.

"Right now, there are about 340 breweries in Colorado. And for 334 of them, they are going to get a 50 percent reduction on their federal excise tax rate," Pease said. "That structure will hold true for all but five of the largest craft breweries in the state."

Brewers that produce more than 60,000 barrels a year will see a $2 per barrel tax break - from $18 to $16 - on annual production of up to 2 million barrels.

"To put that into some dollar context, for a brewery like Left Hand in Longmont, which is one of our larger craft breweries, it's going to be right around $250,000 a year in federal excise tax savings," Pease said. "For a brewery like Trinity in the Springs, it would be about a $6,000 a year savings in their excise tax bill."

The Brewers Association has spent the past decade advocating for the change in tax law. The Craft Beverage Modernization and Tax Reform Act received bipartisan support in the 115th Congress, with more than 300 co-sponsors in the House and 54 in the Senate, with roughly an even split between Republicans and Democrats.

"Small brewers are going to take this savings - $250,000 or $6,000 or $1,500 - and they're going to reinvest it in their business. They're going to hire more workers, or they're going to invest in their infrastructure to improve their equipment and help make better, or more, beer," Pease said.

Indeed, soon after the bill passed in the GOP tax package last week, Left Hand Brewing Co. announced it would immediately hire four more employees.

Mike Bristol, of Bristol Brewing Co., said he plans to make "a couple" additional hires at his Colorado Springs brewery in the new year.

"While the excise tax reduction won't cover all of the cost for these new hires, it makes it feasible to add them," he said. "Without it, we probably would only be able to hire one."

Pease said he's heard similar, anecdotal tales about plans for expansion and hiring at other Colorado breweries.

"The BA doesn't take a position on the broader tax bill," he said. "I'm sure there are many members that like it, and I am sure there are many that don't like it. But it is historic for the small brewing industry."

While he expects the change to spur growth in established brewing operations, he doubts it will provide the "tipping point" for would-be entrepreneurs.

"I think there's somewhat of a misconception among people out there that because there are so many breweries in Colorado, every one of them is profitable immediately," Pease said. "That's absolutely not the case. It's hard to make money in the brewing industry."


Stephanie Earls is a news reporter and columnist at The Gazette. Before moving to Colorado Springs in 2012, she worked for newspapers in upstate NY, WA, OR and at her hometown weekly in Berkeley Springs, WV, where she got her start in journalism.

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