By Joseph Ditzler

The Bulletin

Lost in the glare of news accounts surrounding the tax package passed by Congress on Wednesday is an attached measure intended to save millions of dollars for craft brewers.

The Craft Beverage Modernization and Tax Reform Act slashes the federal excise tax from $7 per barrel to $3.50 per barrel on the first 60,000 barrels from brewers producing fewer than 2 million barrels annually, according to the Brewers Association. The act, folded into the massive tax overhaul sent by Congress to President Donald Trump, also reduces to $16 from $18 the excise tax paid on the first 6 million barrels produced by all other brewers and beer importers. Brewers and importers selling more than 6 million barrels will continue to pay $18 per barrel, according to the association.

“Yes, this tax cut that reduces the federal excise/alcohol tax of small producers by 50 percent is helpful and gratefully accepted,” wrote brewer Steve Anderson of Kobold Brewing, in Bend, by text message. “It’s believed that this (overall) tax bill mostly benefits the wealthiest Americans; this is one small part that does not.”

The Brewers Association estimated the tax break will save the brewing industry $142 million annually.

Brewers that produce 6 million barrels or less annually would save more than $80 million. Small distillers received an even deeper tax cut.

Kobold Brewing sold more than 80 barrels of taxable beer in Oregon this year, according to the Oregon Liquor Control Commission. The cost of business includes bonds, insurance policies, state and local license fees, Deschutes County property taxes on equipment and state and federal excise taxes, Anderson wrote.

“It’s very hard to stay in business as a nanobrewery,” he wrote while boarding a plane.

Deschutes Brewery CEO Michael LaLonde said the approximately $800,000 the Bend-based, family-owned brewery will save will help pay down company debt. The brewery borrowed to make recent improvements, including a pilot brewing system for research and development, six new fermentation tanks and other projects that expand the production facility at SW Colorado and SW Simpson avenues. The brewery is also planning to build a new brewery in Roanoke, Virginia, to come online in 2020 with a brewing capacity of 190,000 barrels annually.

“It’s a huge relief for us,” LaLonde said Wednesday. “Every year there are a ton of projects for us to continue to grow and maintain a facility in Bend. That funding will be reinvested.”

U.S. Sen. Ron Wyden, D-Ore., an opponent of the broader tax overhaul, sponsored the Senate version of the craft beverage act this year. LaLonde said Deschutes Brewery lobbied persistently over several years to get the measure passed, only to be told it needed to be included in a broader tax bill. And that’s what happened.

“Whenever we have a chance with our local representatives and senators, we talk about the tax bill,” he said.

Tony Lawrence, of Boneyard Beer, also a Bend brewery, said he likes the idea of giving breweries the opportunity to reinvest in their operations rather than give more money to the federal government. He said he hopes to put some of the tax break into modern equipment to improve quality control and assurance at Boneyard.

“We’ve been discussing this for years; it’s nothing new to me,” he said Wednesday. “Not that I’m surprised, but I didn’t think it would pass.”

— Reporter: 541-617-7815, jditzler@bendbulletin.com

19076689