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Permanent tax cut for distillers gets final approval

The US Congress has passed a bill to make the Craft Beverage Modernization and Tax Reform Act permanent, a move that will support “struggling craft distilleries in need of economic relief”.

The Craft Beverage Modernization and Tax Reform Act was made permanent just days before it was due to expire

On Sunday (20 December), the Craft Beverage Modernization and Tax Reform Act (CBMTRA) was included in the year-end funding legislation package to help businesses recover from the pandemic.

The decision to make it permanent came 12 months after the tax cut gained a one-year extension and was due to expire on 31 December 2020.

The tax cut was first introduced in 2017 and sees distillers pay US$2.70 per proof gallon for the first 100,000 gallons produced in the calendar year. Previously, distilled spirits were taxed at US$13.50 per proof gallon.

Congress approved the package late on Monday (21 December), hours after it was passed by the House of Representatives. The bill is now due to be signed into law by outgoing president Donald Trump.

The Distilled Spirits Council of the US (Discus), along with other alcohol trade groups, have ramped up their calls for the tax cut to be extended in recent months.

Discus president and CEO Chris Swonger said: “I can guarantee you that across the country craft distillers and their employees will be raising a glass of their finest spirits this evening and toasting their legislators for supporting struggling craft distilleries in need of economic relief.

“By making the reduced tax rates permanent for small distillers, Congress is protecting jobs, boosting communities and helping to get these businesses back on a path of stability and growth. We look forward to the president swiftly signing this package into law.”

The American Craft Spirits Association said in a statement: “The president is now expected to sign the CBMTRA, as a part of the appropriations and stimulus package, making a reduced federal excise tax (FET) permanent for the country’s 2,200 craft spirits producers.”

The US$900 billion package of Covid-19 aid also includes other measures that will help the drinks sector, including additional Paycheck Protection Program (PPP) funding for eligible bars.

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