Peters Introduces Bipartisan Bill Supporting Small Distilleries
Legislation Would Reduce Excise Tax on First 100,000 Gallons of Distilled Spirits Produced
WASHINGTON, DC – U.S. Senators Gary Peters (D-MI), Dan Sullivan (R-AK) and Kirsten Gillibrand (D-NY) today introduced bipartisan legislation to support small distilleries in Michigan and across the country. The Distillery Excise Tax Reform Act would reduce the federal excise tax rate on distilled spirits from $13.50 per proof gallon to $2.70 per proof gallon on the first 100,000 gallons produced per year. Michigan has the third highest number of craft distilleries in the country, with nearly 40 across the state, many of which opened in recent years.
“Michigan is one of the top states in the nation for small distillery openings in recent years, and we need to ensure these local small businesses are able to get off the ground and grow their businesses,” said Senator Peters. “Starting a distillery take a lot of time, effort, and capital, and the high excise tax on craft distilleries makes growing their small businesses more difficult. I’m proud to introduce legislation that will support small distilleries and help them grow their businesses, create new jobs and focus on what they do best - producing quality spirits.”
“Small businesses are the backbone of America,” said Senator Sullivan. “However, largely because of over-regulation and excessive taxation, more small businesses failed than were started this past year. We can’t allow that trend to continue. We must do everything in our power to allow small businesses to thrive and to help create jobs for our citizens. That’s why I’m pleased to support this bill and will continue to work to cut red tape and lower taxes on small businesses in all sectors across the country.”
“Reducing the excise tax helps alleviate excessive strain on our local businesses,” said Senator Gillibrand. “Strong small businesses are vital to our economy. This legislation will help our local distilleries maintain the quality of their products and compete in this growing market while attracting new business and creating jobs.”
Small craft distillers facing the costs of purchasing new equipment and hiring new employees are least able to pay excise taxes on alcohol, and because of the capital required to buy the stills and time it takes to produce many of their products, distilleries are more difficult to start than microbreweries or wineries.
“I started my distillery eight years ago to support Michigan jobs and prove that high quality spirits could be made right here in Michigan,” said Rifino Valentine, President of the Michigan Craft Distillers Association and founder and owner of Valentine Distilling in Ferndale. “While I’m proud to say we are expanding our facility, so many small distilleries are at a unique disadvantage as a result of the high federal excise tax. I thank Senator Peters for introducing this legislation that will not only help small distillers buy equipment and create jobs, but support local suppliers we rely on.”
For the average young distillery producing 30,000 proof gallons in a year, reducing the excise tax to $2.70 per proof gallon would mean a savings of $324,000 - the price of a new still or six new staff. The bill would additionally create distiller tax parity with craft brewers and winemakers – groups that already have an excise tax schedule that recognizes and supports domestic manufacturing growth in their industries.
Estimates show that the growing spirit industry could add up to $400 million to Michigan’s economy, and many Michigan distilleries utilize locally-grown grains and fruits for their products. Across the country, the distilled spirits industry directly employs over 800,000 Americans directly and supports over 1.2 million jobs.
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