Squadron bill to aid brewers offers ‘beer production credit’

[media-credit name=”Photo by William Alatriste/NYC Council ” align=”aligncenter” width=”600″][/media-credit]
Daniel Squadron at a recent rally for middle-income housing in Tribeca.
BY AIDAN GARDINER  |  It seemed like locally brewed beers were going to become a bit more expensive coming out of the tap, but state Senator Daniel Squadron, along with several other state and federal lawmakers, may have crafted a solution.

Squadron joined with U.S. Senator Chuck Schumer, Brooklyn Assemblymember Joseph Lentol and several others, to back a comprehensive package of tax benefits that would keep the costs of production for New York brewers down — despite a March court decision that ruled the tax credits the local brewers had previously enjoyed were unconstitutional.

Because of the court decision, brewers would have to pay 14 cents per gallon in state taxes and an additional 12 cents on every gallon of grog sold in New York City. It was estimated that costs would jump nearly $500,000 per year for those brewers that annually produce 100,000 barrels.

But the new legislation, which Squadron and Schumer unveiled at a May press event at the East Village Tavern, 156 Avenue C at 10th St., is supposed to help mitigate the cost jump, providing those brewers who produce fewer than 6 million barrels annually a 14 cent per gallon tax credit for the first 200,000 barrels they make each year.

“From the good jobs they create to the great beer they produce, New York’s brewers are key to New York’s economy,” Squadron said. “A New York beer production credit will let our small brewers keep growing, while keeping their beers affordable. That’s more jobs and better options at the tap, which is something we should all toast to.”

The bill passed the state Senate last Wednesday as part of a larger economic package, leaving it up to the Assembly to move forward on the legislation. Lentol said there is a willingness in the Assembly to help brewers and that a solution will be crafted by the end of the current session on June 21, but he’s unsure of what it will look like. He hopes to pass a tax credit similar to the one that made its way through the state Senate.

“There’s a desire to make the brewers whole and it was never our intent to collect these taxes,” Lentol said. “It’s important to use tax credits like this to generate business for the state, and in this case it generates jobs and stimulates the economy, which is what tax
credits should do.”

Schumer has also introduced legislation at a federal level that would go a step further toward recouping tax benefits New York mircobrewers previously enjoyed. His bill would dash federal excise taxes for producers of fewer than 1.9 million barrels per year, which could save them as much as $4 million annually.

“If we do not get this bill passed, we could be looking at a price increase of $9 per barrel,” said Steve Hindy, co-founder and president of Brooklyn Brewery. “That could translate to a $1 increase for a pint of beer at a pub, and $1 increase for a six-pack at a retailer.”

This legislative package also comes on the heels of a recent push by Governor Andrew Cuomo to promote local businesses, such as wineries and yogurt manufacturers, as well as the tourism industry, so they can produce both more jobs and more revenue for the state.

New York’s beer industry is a major economic force. Behind California and Colorado, the Empire State is the country’s third-largest brewer of craft beers, according to the Wall Street Journal. The industry supports 8,000 jobs directly — as many as 60,000 more when factoring in retail sellers — and if the new legislation passes could create an additional 3,000 jobs over the next four years, according to Squadron’s office.

“To get rid of the exemption without replacing it with the Empire State Brewers Tax Credit makes no sense. We will be stopping jobs and expansion in their tracks,” Squadron said at a recent press event in Albany with several local brewers. “Let’s get this done because we’ve got jobs and communities
depending on it.”

For the record, Squadron’s favorite beer is Brooklyn Lager — “Classic,” he said.