New York reinstates beer tax and brewers are hopping mad
A lawsuit waged in New York by a Massachusetts brewery is ending with a change that will affect independent beer makers from Buffalo all the way to the Big Apple.
As a result of a lawsuit filed by Massachusetts’ Shelton Brothers brewery, small time brewers operating within The Empire State will soon have to fork over funds to cover a newly reinstated tax policy that stands to cost craft beer producers as much as $100,000 extra each year. In 2000 a tax exemption clause was put in place to benefit brewers that both operate and distribute in New York, but now the State Liquor Authority is being forced to repeal a rule that previously offered a massive incentive for those looking to launch independent businesses across the state.
Up until this month, local brewers were exempt from an excise tax which was otherwise tacked on to beer makers from out of state. Until recently, the first 200,000 barrels of beer produced by a company within New York were exempt from taxes that were imposed on other ale importers. Starting immediately, however, those small-time brewers who only produce a limited number of delicious nectar each year will be taxed on each and every barrel — to the tune of $4.34 apiece.
Additionally, brewers in New York that produce fewer than 1,500 barrels will now be forced to pay a $150 label registration fee. Scott Vaccaro, a brewer at the Captain Lawrence facility in Elmsford, NY estimates that the new change will cost his small company close to $100,000 in extra fees each year.
“The New York State brewing industry is doing really well,” he says on the Captain Lawrence website. “This is a great way to stop it.”
Just recently Captain Lawrence increased their output from 9,000 barrels of beer a year to over 40,000. The upgrades necessary to accommodate that change cost the company around $1.5 million, Vaccaro tells the Washington Post. Henow says he is “disappointed.”
The Brew New York website adds that for smaller breweries that handle distribution on their own, such as Oceanside’s Barrier Brewing, they will now have to pay not just a state tax but an additional New York City excise tax of $3.72 for selling there swill in the Five Boroughs. For them, the new rules will require them to pay more than $8 extra on each barrel. These craft beer producers will be among the hardest hit since producing only a limited supply of brew andkeeping the cost-per-bottle higher in order to conduct business on a wider scale are necessary.
Up until the law was reenacted, New York State was considered by many a great place to get a microbrewery off the ground. Last year US Senator Charles Schumer threw his weight behind a new campaign across the state that was rolled out under the banner of “I Love NY Brew.” In December, Schumer signed his name to a press release that saluted local brewers and said that the new campaign would bring profits for swill producers from Niagara Falls to Albany and all points in-between.
“Local breweries across the state are proven job creators, helping support 60,000 New York jobs and brewing not simply great beer, but billions for our local economy too,” Schumer wrote at the time. “Craft breweries have catapulted New York to the top shelf of beer states, and our beers are more than ready for prime time. Whether you are searching for a six-pack at your local 7-Eleven or grabbing Buffalo wings with a beer after work, you should have a wide assortment of locally brewed beers to choose from. I’m strongly urging New York restaurants, bars and convenience stores alike across the state to take a close look at New York’s beers, and consider putting them on their shelves or on their menu. It would be a win-win, both for those selling the beer, and for the breweries making it.”
Those 60,000 jobs might soon be in jeopardy, however, as brewers across New York will be forced to start sending checks to the state in order to cover the newly instated tax clause. Speaking to the Wall Street Journal, New York State Brewers Association President David Katleski says the rule change will have a “major impact” on the ability for small companies to expand their operations.
The State Liquor Authority has reenacted the tax on local beer makers after being hit with a lawsuit over its practice of handing out breaks to New York businesses. Belchertown, MA’s Shelton Brothers Brewery took the Liquor Authority to court after they were banned from importing a beer to New York that lawmakers there said would appeal to underage drinkers due to a depiction of Santa Claus on the label. The Shelton Brothers’ claimed First Amendment privileges in the defense and not only challenged the Liquor Authority’s decision, but their practice of picking and choosing who would be afforded tax breaks.