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New SLA Rules Will Cost Small Breweries A Fortune In Taxes
By
John Del Signore
Published Apr 25, 2012
Modified Apr 25, 2012
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By
John Del Signore
Published Apr 25, 2012
Modified Apr 25, 2012
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For 12 years now, small breweries in New York State enjoyed a crucial tax break that allowed them to excise taxes on the first 200,000 barrels of beer brewed by in-state brewers. This tax incentive enabled fledgling start-ups to get off the ground, and coincidentally or not, New York has some of the best microbrews in all the land. But that could be in jeopardy now that the SLA has issued new rules cancelling the tax exemption. It could potentially cost small brewers millions.
Brew New York reports that the changes come after Massachusetts-based Shelton Brothers took legal action to question the constitutionality of the SLA’s label registration fees and excise taxes, which out-of-state brewers had to pay, but small in-state brewers did not. An estimated 700,000 barrels out of the million-plus produced in the state every year will now be subject to excise tax. Among them is tiny brewery like Barrier Brewing in Oceanside, based on Long Island. Brew New York explains:
Since they self-distribute to New York City instead of using a distributor, they are now personally subject to paying the state tax, and an additional New York City excise tax of $3.72 per barrel (when using a distributor, the tax is passed on to them using the “Brewery Exemption” in ABC Law). That’s $8.06 per barrel that in-state breweries will now pay for every drop of beer they send to New York City that they didn’t before. For a brewery that last year had a capacity of about 500 barrels, that’s a tax levy of over $3,000 if just half their beer went five miles west across the city line.
Beer enthusiasts worry that the end result will be less beer diversity in New York, as well as more expensive beer. And man, you do not want to get in an argument with a beer enthusiast. The comments section on Brew New York's post is getting pretty heated! It's only a matter of time before one of them busts out the GIF of Natalie Portman breaking a bottle over her head.
The new tax rules come as Governor Cuomo considers signing a bill that would let brewers finally get out of open-ended contracts that make them essentially prisoners of their distributors.
Tagged
beer
craft beer
microbrew
microbreweries
small brewers
John Del Signore
Originally from the Albany area, John Del Signore has called NYC home since 1995. In addition to his thousands of meticulously-crafted bespoke blog posts for Gothamist, his writing has also been published in The Awl, Deadspin, The Nervous Breakdown, and performed at The Brick Theater in Brooklyn.
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Gothamist is funded by sponsors and member donations
Gothamist is funded by sponsors and member donations
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