Last Thursday, a press conference was held at the Pump Station brewery and restaurant in Albany to voice the concerns of New York beer makers following the elimination of a longstanding tax break exempting small brewers from excise tax and brand label registration fees. In a Daily News Op-Ed piece, Steve Hindy sums up the importance of this issue:
In the midst of the nation’s worst recession in a generation, one of the few bright spots for New York has been the revival of the state’s craft beer industry… But a recent legal settlement and other impediments threaten to sap the vitality of small brewers if Albany doesn’t act soon… This comes at a time when many of us are trying to spread our wings… The growth of our industry has also propelled the rebirth of several others, most notably hop farming, which is poised to return as a major cash crop upstate… Luckily, we have some champions in Albany who are trying to help us. State Sens. Lee Zeldin (R-L.I.) and Daniel Squadron (D-Manhattan, Brooklyn) and Assemblyman Joseph Lentol (D-Brooklyn) are working on a bill that would give a tax credit for production and brand label fee registrations in New York, the same kind of incentive that has spurred the film industry and the increased use of biofuels… In the 19th century, there were hundreds of breweries across New York, though the population was a fraction of what it is today… Prohibition annihilated the industry, and it’s taken nearly a century to bring it back. We’re stronger and better than ever now, and poised to become a major economic accelerator for New York. Let’s not let shortsighted policies stop that growth again.
We encourage all supporters of NY state beer to visit the NYS Brewers Association and ask your lawmaker to support this important tax credit legislation. See below to read/watch some of the coverage the hot topic has received:
“Tax ‘ales’ small brewers” Albany Times Union, May 30, 2012: In previous decades, the Williamsburg section of Brooklyn was the epicenter of ethnically infused beer battles among dozens of brewers.
Assemblyman Joe Lentol, a Democrat who represents it, remembers those days — and every jingle that came with it. He sang a few bars of Schaefer and Rheingold on Wednesday in a local brewery before joining a chorus of lawmakers and brewers seeking a new tax break.
In fact, it’s new but old: Until March, New York’s breweries had been exempt from a 14-cent-per-gallon tax on the first 200,000 barrels (6.2 million gallons) of beer as well as a $150 fee for every brand label they registered.
Out-of-state brewers sued over what they said was a distortion of interstate commerce. The case was quickly settled on March 28.
The state’s 92 brewers — now growing in both number and size — were facing a tax increase of up to $1 million a year. The Brooklyn Brewery, which operates in Lentol’s district, would be forced to pay $600,000 a year, brewery president Stephen Hindy said.
“Guess what, the companies — Schaefer, Rheingold, are gone from Williamsburg,” said Lentol. “These are our New York infant industries, and we have to help them.”
You could argue over whether Brooklyn Brewery is a baby, with its lagers and ales distributed nationally and internationally. But smaller breweries, including Brown’s in Troy and the C.H. Evans Brewing Company, the operator of the Albany Pump Station, would feel the tax hit. Brown’s liability would now be just under $12,000, but could rise as it expands to a new facility in Hoosick Falls.
Neil Evans, who hosted the news conference at the Pump Station, said his tax hit would be less than $5,000 a year, but “we had every intention of hiring an assistant brewer and increasing production, and that would hurt.”
Since a tax exemption is illegal, lawmakers are proposing tax credits for the same amount. The proposal has no real opponents, and considerable support from legislators in both parties, but like all such measures the brewers fear their bill will be lost in the muck of the Legislature.
Brewers argue the proposal won’t affect the state budget, because this year’s spending plan assumed brewers would still get the tax exemption, worth around $1.8 million.
Senate Republicans passed the proposal as part of a larger package of tax incentives Wednesday, and Sen. Lee Zeldin, R-Long Island, said a standalone bill would move through a committee Thursday.
Lentol carries a bill in his Democrat-dominated Assembly that would address the production tax, but not the labels. Mike Whyland, a spokesman for Assembly Speaker Sheldon Silver, said, “We’re looking at various proposals to encourage small brewers in New York and we are optimistic that we can come up with a cost-effective solution.”
When the decision was first reported, Gov. Andrew Cuomo expressed sympathy, so Zeldin was optimistic.
“My research has found that everyone likes beer. It really does transcend partisan politics,” he said. “I don’t know the governor’s choice of brew, but he’s an ‘I Love New York’ governor, so I hope he’ll be supportive.”
“Craft brewers looking for relief from unexpected tax hike” YNN, May 30, 2012: Craft brewers are hoping some tax relief is on tap. Joined by elected officials at Albany Pump Station, brewers spoke about the unexpected jump in their state taxes. In March, a state court ruled that a state excise tax exemption was unconstitutional, a sobering realization for brewing companies.
Nick Matt, the Chairman and CEO of F.X. Matt Brewing Co., said, ”Frankly, this is a slap in the face, to all of a sudden have this happen because we didn’t see it coming.”
Now, brewers are pushing lawmakers to pass a bill that’ll give small breweries a tax credit on barrel production and brand label registration fees.
State Senator Lee Zeldin said, ”The one thing I’m pleased to report after extensive research is that Republicans and Democrats, it transcends politics. We like beer, and we like the idea of taking this industry that is growing and helping it move to an even greater tomorrow and that’s why we’re here.”
Without relief from Albany, brewers would face annual tax increases ranging from $10,000 to $1 million. Some say that could cut down on their ability to expand, hire workers, and keep the price of a cold one down.
Steve Hindy, the President of Brooklyn Brewery, said, “You can imagine this kind of hit in the first quarter of the year when you’re just beginning to implement your budget, really requires you to take a look at the whole plan for a year and the future.”
While in bad spirits now, brewers hope this problem brewing won’t be a problem for long.
They hope the bill will be passed before state government wraps up for the summer.
Matt said, ”These are New York State businesses that will stay in New York when they are successful because they’re built on local business. Small breweries are an economic bright spot in an otherwise not very good economy.”
State Senator Daniel Squadron said, ”To my colleagues lets do this in bipartisan way bicameral way and get it done because we have jobs and communities around the state depending on it.”
“Let New York’s Beer Flow” NY Daily News Op-Ed, May 31, 2012: In the midst of the nation’s worst recession in a generation, one of the few bright spots for New York has been the revival of the state’s craft beer industry. Now more than 90 breweries strong, the industry accounts for 3,000 jobs and pumps more than $200 million into our economy. But a recent legal settlement and other impediments threaten to sap the vitality of small brewers if Albany doesn’t act soon.
This comes at a time when many of us are trying to spread our wings. Brooklyn Brewery, my company, is completing a $12 million expansion in Williamsburg. Both Ithaca Brewing and Southern Tier recently announced major expansions. The growth of our industry has also propelled the rebirth of several others, most notably hop farming, which is poised to return as a major cash crop upstate.
That’s why it came as such a blow in March when the state settled a lawsuit by a small importer. As a result, an excise tax exception that had largely been responsible for the craft-brewing renaissance will be eliminated.
The incentive had exempted New York-based breweries from paying state and city excise tax on their first 200,000 barrels of production (one barrel is about 14 cases of beer).
Brooklyn Brewery is on target to brew about 180,000 barrels this year. The ruling will cost us nearly $600,000 in new taxes.
Last year, New York collected almost $60 million in state excise taxes from the brewing industry. This additional increase will surely wipe out the profit margins of small brewers who are struggling to bring good, locally made beer to the residents of New York.
As a result, they will either have to raise prices, lay off employees or scrap expansion plans.
What’s more, the tax issue merely compounds other impediments to the industry’s growth.
For example, New York breweries pay the highest brand label registration fees in the country — $150 a year for every brand. So for a brewery like ours, with roughly 40 brands to its name, that’s an additional $6,000 a year in fees.
This is a major burden for smaller breweries that are experimenting with dozens of different brands. Variety helps distinguish brewers in the marketplace, yet each new recipe requires an additional payment to the state. Meanwhile, if we were located in New Jersey, where registration is just $23 a brand, our costs would be dramatically reduced.
Luckily, we have some champions in Albany who are trying to help us. State Sens. Lee Zeldin (R-L.I.) and Daniel Squadron (D-Manhattan, Brooklyn) and Assemblyman Joseph Lentol (D-Brooklyn) are working on a bill that would give a tax credit for production and brand label fee registrations in New York, the same kind of incentive that has spurred the film industry and the increased use of biofuels.
And this tax credit would be revenue-neutral for the state budget — meaning it would not cost New York taxpayers any additional dollars.
We hope other lawmakers get behind this effort. There are breweries in nearly every legislative district in the state, and they will each suffer if Albany fails to act.
Make no mistake, brewers pay their fair share and are helping rebuild New York’s still-flailing economy. We ask only for smart legislation and regulation that supports — rather than strangles — our growing businesses. Come out to any beer festival this summer and you’ll see just how vital this industry is, from the quality of the product to the enthusiasm of consumers to the pride with which we flaunt “Made in New York.”
In the 19th century, there were hundreds of breweries across New York, though the population was a fraction of what it is today.
Prohibition annihilated the industry, and it’s taken nearly a century to bring it back. We’re stronger and better than ever now, and poised to become a major economic accelerator for New York. Let’s not let shortsighted policies stop that growth again.
“N.Y. brewers foaming over excise tax hike” Rochester Democrat and Chronicle, May 29, 2012: A variety of New York’s craft brewers and lawmakers will get together Wednesday in Albany to push for tax credit legislation dealing with beer making.
The state’s beer brewers are protesting the end earlier this year of a state excise tax exemption that, according to the state Brewers Association, saved brewers anywhere form $10,000 to $1 million annually, depending on the size of the brewery.
State Senators Lee Zeldin, R-Long Island, and Daniel Squadron, D-New York City, and Assemblyman Joe Lentol, D-New York City, have proposed legislation that would provide tax credits on production and brand label fees to offset that excise tax.
“New taxes and fees threaten to stifle this industry just as it’s becoming a major economic driver for the state,” state Brewers’ Association President David Katleski said in a statement.
The brewers from around the state and lawmakers will bring their bully pulpits to Albany’s Pump Station brewpub for a noontime press conference.
ADDITIONAL TV CLIPS:
WKTV (NBC) Utica
WRGB (CBS) Albany
WNYT (NBC) Albany
WXXA (FOX) Albany
WHAM (ABC) Rochester