LOUISVILLE, Ky. (WDRB) -- Kentucky craft brewers worry that a tax break that is about to expire will have far-reaching consequences on investments, beer prices or even the types of beers you’ll get to drink next year.
The Craft Beverage Modernization and Tax Reform Act is set to expire Jan. 1, and according to the Beer Institute, that would mean a tax increase for America’s beer industry of $100 million.
Nathaniel Gravely, owner of Louisville-based Gravely Brewing Co., said the bill’s expiration would double his federal tax bill.
“It’ll be big. We will feel it,” he told WDRB News.
The higher expenses will force brewers to think hard about anything from expansion plans to higher beer prices to what types of beers they will be brewing, Gravely said.
“There’s a domino effect,” he said. “Something will happen.”
Nathaniel Gravely, owner of Gravely Brewing Co.
Derek Selznick, executive director of the Kentucky Guild of Brewers, told WDRB News that the tax increase would threaten to slow or halt the industry's growth.
In the last decade, the number of breweries in Kentucky has increased eightfold, and employment now exceeds 1,000.
“We want to continue that growth,” Selznick said.
The federal tax break enables small brewers to invest the dollars into anything from equipment from North Carolina to grain from Wisconsin and hops from Michigan, he said.
Derek Selznick, executive director of the Kentucky Guild of Brewers.
Potentially higher taxes already are putting the brakes on investment plans next year, Selznick said, with some guild members considering lower Christmas bonuses and hiring freezes. He said he and other industry leaders are urging U.S. Congress to make the tax break permanent or at least to extend it for six months, given that Congress has a lot on its plate right now.
Federal legislators appear to thirst for an extension of the tax break: The House bill that would make the tax break permanent has 325 co-sponsors among the body’s 435 members, including John Yarmuth, D-Ky.
Gravely said he and other brewers repeatedly have contacted legislators to urge them to pass the bill.
“Time is ticking,” he said.
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