Beer as stimulus: Tax breaks sought for small breweries

Idaho StatesmanMay 24, 2010 

When U.S. Sen. John Kerry announced last week he wanted to give America's 15,000 small brewers a tax break, he was joined by senators Sen. Ron Wyden of Oregon and Sen. Mike Crapo of Idaho.

Wait. What? Idaho? Crapo?

While Oregon and Massachusetts are both well known for their iconic craft beers — think Deschutes Brewery, Full Sail and Samuel Adams — Idaho is an up-and-coming craft beer state.

But it's the up-and-coming part Crapo is focusing on.

"Like any private business, (craft brewing) is all about supply and demand," Crapo said Thursday. "Our many craft brewers in Idaho who are seeking to expand their business have clearly found the right formula," because their beers are generating an increasing demand, he said.

"Such a tax reduction could also eliminate a barrier that may be preventing other small brewers from entering the market in Idaho." The bill, introduced in the Senate last week, would reduce the federal excise tax for small breweries from $7 to $3.50 per barrel for the first 60,000 barrels of beer produced each year. For every additional barrel up to 2 million, the bill would lower the excise tax from $18 to $16.

While Idaho has about 20 brewpubs (including four in Boise), the spud state has only two commercial breweries that produce kegs and bottles of beer for sale regionally — Victor-based Grand Teton Brewing Co. and Ponderay-based Laughing Dog Brewing Co. — and neither are even close to exceeding 10,000 barrels of beer.

But every commercial brewer, no matter how small, pays federal taxes on every barrel of beer sold. That'swhy almost all of Idaho's craft brewers sent Crapo a petition earlier this year asking him to support the bill.

"This would be a huge benefit to us, and other Idaho brewers," said Laughing Dog owner Fred Colby, who bottles craft beers like the Dogzilla Black IPA and Dogfather Imperial Stout and sells them in Idaho and surrounding states. "If that happened, I could get enough of a break to help pay for a new employee ... That money would go right back in to our operation."

Colby is opening a bigger brewhouse in Ponderay and hopes to increase production from about 2,000 barrels brewed in 2009 to as much as 10,000 over the next few years. Since Colby has only four full-time employees, adding another worker is a big deal.

Colby would have saved about $7,000 in 2009 with the tax break.

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