Udall pushes tax break for brewers large & small

7:15 PM, Jul 13, 2012   |    comments
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The tax cut won't save you much on the next beer you buy. It only amounts to about 1.5 cents per pint.

The hope is that the tax break would stimulate job growth in the booming craft brewing sector.

While the Great Recession took a toll on many businesses, Colorado's craft brewers kept growing. Many report more than 30 percent growth each of the last few years.

People may not have enough money to treat themselves to new cars, but "beer is an affordable luxury," says Brian Dunn, owner of Great Divide Brewing Company in Denver.

The basic unit of beer in a brewery is the barrel, which is 31 gallons or two standard-size kegs.

Commercial brewers pay a federal excise tax of $18 per barrel. Small brewers get a discounted rate of $7 for the first 60,000 barrels they brew.

That is the number of barrels that Breckenridge Brewing Company in Denver expects to make this year. The tax break would give the company $210,000 extra to spend.

Great Divide would save $126,000 this year and Dunn says he would use that money to hire people.

"We right now need to hire a couple people," said Dunn. "But we're looking at the numbers and it's like 'we need them but can we afford to pay for them?'"

In fact, Dunn has already added eight new jobs to the brewery this year. Even though he could use more, he has to balance hiring with purchasing expensive equipment to expand the brewing operation to meet a booming demand.

"To allow the business to grow it takes anywhere between $1 million and $2 million a year," said Dunn.

In Boulder with a beer in hand, Sen. Udall looked over Avery Brewing Company's plans to build a brand-new multi-million dollar facility. The company has maxed out its space and hopes to move in 2014.

The investment that the brewery plans to make is a good example of why Udall wants to cut the beer tax.

Udall says each dollar saved for a brewery generates about $10 of economic activity.

However, the bulk of the tax break in Udall's plan would go to well-established mega-brewers. Large breweries would see their taxes cut in half on the first two-million barrels they brew each year. At a $9 discount, that amounts to an $18 million savings for the companies that brew big brands like Budweiser and Coors.

"Big brewers are part of the industry," said Udall. "Let's not ignore them."

A competing plan introduced by Sen. John Kerry (D - Massachusetts) would only benefit small brewers. It offers the same $3.50 discount for the first 60,000 barrels and a lesser $2 discount up to two-million barrels.

Udall says there's room for negotiating when it comes to the formula of the tax break.

He figures his plan will cost more than $80 million and says "stay tuned" while he searches for money in the federal budget to offset the cost.

(KUSA-TV © 2012 Multimedia Holdings Corporation)

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