Luke Kemper: Brewing economic growth
Published: Sunday, May 19, 2013 at 6:01 a.m.
Last Modified: Thursday, May 16, 2013 at 11:13 p.m.
Food and drink have long been weaved into the very DNA of this country, and there is nothing more patriotic than consuming artisanal products made in our own backyard.
I recently had the opportunity to meet with small and independent craft brewers from across the country at the Craft Brewers Conference & BrewExpo America in Washington, D.C. It was not only for inspiring dialogue on the craft beer revolution, but also to discuss ways to we can grow our small businesses.
As one of the more than 2,400 breweries currently operating in the U.S., we are working at Swamp Head Brewery to create jobs and bolster the economy, all while providing locally made products to our neighbors and community. My colleagues at craft breweries across the country are all working to do the same in their areas.
However, as we work to support the community, we must recognize that small brewers are not immune to the host of issues experienced by all small businesses, including rising costs of essential expenditures. Hop and malt prices have increased dramatically due to a number of factors. Rising fuel prices also add high freight costs to the cost of production and distribution, as raw ingredients and finished products are heavy. And we face these challenges in one of, if not the most, highly regulated and taxed industry sectors in the country.
Like other small businesses, we need a tax code that will help us expand, remain competitive in the marketplace, protect existing jobs and stimulate new employment opportunities. A bill is currently being considered in Congress, which would help all small brewers do just that. The Small BREW Act seeks to recalibrate the federal beer excise tax that small brewers pay on every barrel of beer they produce.
Under current federal law, brewers making less than 2 million barrels annually pay $7 per barrel on the first 60,000 barrels they brew, and $18 per barrel on every barrel thereafter. The proposed legislation would create a new rate structure that reflects the evolution of the craft brewing industry. The rate for the smallest brewers and brewpubs would be $3.50 on the first 60,000 barrels. For production between 60,001 and 2 million barrels the rate would be $16.00 per barrel. Any brewer that exceeds 2 million barrels would begin paying the full $18 rate. Breweries with an annual production of 6 million barrels or less would qualify for these tax rates.
To give this some perspective: The largest domestic brewer produces about 100 million barrels of beer in the U.S. and more than 300 million worldwide. At Swamp Head we brewed 3,700 barrels in 2012. Any savings that we would receive through this legislation would be invested right back into our brewery, enabling us to increase production and in turn, hire more people to handle this increased production.
Congress has not recalibrated the excise tax on small brewers since 1976. At that time, there were 30 small brewers; today, there are more than 70 times as many. If this legislation is enacted, it would provide small brewers with an additional $60 million per year that would be used to support significant long-term investments in equipment and job creation by growing their businesses on a regional or national scale.
On average, every American lives within 10 miles of a brewery, and millions have toured or tasted at their local brewery. Florida alone is home to 44 breweries, a number that is constantly growing.
We urge our congressional representatives to support the Small BREW Act and stand firmly behind the craft brewing community — one of America's true national treasures.
Luke Kemper is the owner/operator of Swamp Head Brewery in Gainesville.
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