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US government extends tax cut for craft distillers

Spirits producers in the US are breathing a sigh of relief after the government agreed to a one-year extension of a federal tax cut for craft brewers and distillers.

Craft distillers in the US have welcomed an extension of the Craft Beverage Modernization and Tax Reform Act

The US introduced legislation that extends the Craft Beverage Modernization and Tax Reform Act for another 12 months on Tuesday (17 December).

A two-year version of the Craft Beverage Modernization and Tax Reform Act was introduced in 2018 as part of US president Donald Trump’s US$1.4 trillion tax reform.

The legislation gave domestic brewers and distillers who produce fewer than 60,000 barrels a year a 50% federal tax reduction.

Over recent months, distillers and brewers have ramped up efforts to convince the US government to make the legislation permanent. If unsuccessful, distillers and brewers would have faced tax hikes from 1 January 2020.

The one-year extension has been welcomed by numerous spirits trade bodies, which have highlighted the work of senate leader Mitch McConnell in securing the extension.

Chris Swonger, president and CEO of the Distilled Spirits Council of the US (Discus), said: “Senate leader Mitch McConnell has been a steadfast advocate for the Craft Beverage Modernization and Tax Reform Act.

“The senator knows first hand the devastating impacts Congressional inaction could have had on distillers throughout Kentucky and his support is instrumental in moving this bill forward.

“We look forward to continuing to work with leader McConnell on issues of critical importance to Kentucky distillers and their communities.”

The legislation also includes reforms brought into effect in 2017 that create a fair and equitable tax structure for brewers, winemakers, distillers and importers of alcoholic drinks.

Eric Gregory, president of the Kentucky Distillers’ Association (KDA), said: “These measures are vitally important in continuing Kentucky Bourbon’s historic renaissance, which is pouring more than US$8.6 billion into the Commonwealth’s economy each year, and is responsible for 20,100 jobs, US$1 billion in payroll and US$2.3bn in capital investment.

“Leader McConnell’s crucial commitment to our signature industry will continue to fuel Kentucky’s economy, which is why the KDA last year recognised his championship with our prestigious ‘100 Proof’ Award. We appreciate and applaud his unwavering support.”

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