Congress Approves One-Year Extension of Tax Relief for Craft Booze Makers

UPDATE: The White House signed the Craft Beverage Modernization and Tax Reform Act as part of the Further Consolidated Appropriations Act, 2020 into effect through December 31, 2020.

With time expiring, the U.S. government appears poised to give alcoholic beverage producers the Christmas present they've been begging for—but to keep the analogy going, you could say Congress got them the video game while the console is still on layaway.

Earlier this week, I wrote about how beer, wine, spirits and other alcoholic beverage companies were facing what could have been a serious tax hike—double for most small brewers and quadruple for many craft distillers—if the Craft Beverage Modernization and Tax Reform Act (CBMTRA) wasn't extended before expiring on December 31. Adding to these booze producers' frustration was that bills in both the House and the Senate that would have extended these federal excise tax cuts indefinitely had strong bipartisan support from about three-quarters of members.

And yet, apparently, political bickering meant the can simply got kicked down the road—until yesterday, when the can got a one-year punt. Yes, both houses of Congress have passed a package that will extend the CBMTRA—one that CNN says President Trump plans to sign—but the extension will only last for one year, after which it will have to be extended again.

Certainly, anything is better than nothing, but in many ways, a one-year extension doesn't offer the full effects these companies are hoping for. On the bright side, maintaining low tax rates will allow producers who built business models based around the current tax relief to avoid having to do things like raise prices or flat out figure how to earn enough money to pay their tax bills. But in the long term, the continued uncertainly likely means that these same companies won't necessarily use their tax savings to reinvest in their businesses this year, knowing that they could potentially lose their tax benefit next year. As a result, a one-year extension stifles potential growth—one of the primary benefits of this tax relief.

"We are pleased Congress has come together to prevent a $130 million tax increase on our nation's thriving beer industry," Jim McGreevy, president and CEO of the trade group the Beer Institute, wrote in an email to members, according to Brewbound. "As we enter 2020, we will continue fighting for excise tax relief permanency with the popular bipartisan, bicameral Craft Beverage Modernization and Tax Relief Act." I mean, what else will the government have to worry about in 2020? Actually, yeah, let's not discuss that.