Small brewers in New York State are facing their biggest legislative challenge ever. On March 28, the state tax department struck down the small brewers’ excise tax exemption in response to an importer’s claim it violated the Commerce Clause of the U.S. Constitution because it favored NYS brewers over out of state brewers. The exemption was for New York brewers under 200,000 barrels.
The Legislature had approved the exemption in 1989 to encourage the small brewing industry in the state. And it worked. There are more than 90 breweries in the state today. This additional tax will cost the Brooklyn Brewery $600,000 this year alone. What an unwelcome surprise. It could force us to raise prices to cover the tax.
Our legislators and the governor reacted quickly with a plan to enact a production tax credit for beer brewed in New York. It is believed that would pass muster with the Constitution. We sure hope so. New York is one of the most expensive places in the world to brew beer.
Small brewers employ more than 3,000 people in New York, and our breweries are a big attraction for the state’s booming tourism industry. We hope our legislature moves quickly. There are only two weeks left in the current session. Meanwhile, Brooklyn Brewery paid about $50,000 in unexpected taxes in April, and the May bill is on the way.
– Steve Hindy, President & Co-founder