Alcohol industry fights to prevent tax hikes in 2025

In the United States, the alcoholic beverage industry is preparing to advocate against potential tax increases as Congress seeks funding for significant tax legislation set for 2025. This effort comes in response to the 2017 Tax Cuts and Jobs Act, which provided excise tax reductions for alcohol producers. Industry representatives, including Chris Swonger and Denzel McGuire from the Distilled Spirits Council of the United States, emphasize the previous tax cuts’ success and urge Congress not to impose new taxes that would burden distilleries already operating with high tax rates. They point out that consumers have less disposable income, leading to a slight contraction in the beverage alcohol marketplace. The call for the preservation of the tax cuts comes at a time when the industry faces challenges, including recent warnings about alcohol as a preventable cancer risk by the Surgeon General. During the early pandemic phase, retail alcohol sales surged significantly due to bar closures for social distancing. This unexpected growth provided some solace to the industry after enduring years of heavy taxation. The Beer Institute reported that the beer segment of the industry alone supports millions of jobs and contributes substantially to the economy, highlighting the need for favorable tax conditions to foster business reinvestment and job creation. Prior to the 2017 tax overhaul, distilleries faced a high excise tax of $13.50 per proof gallon on spirits. Following the tax reform, the first 100,000 proof gallons are now subject to a reduced rate of $2.70, significantly easing the financial pressure on manufacturers. This adjustment has enabled many distilleries to flourish, with leaders in the industry, such as Quint, asserting that numerous facilities may not have existed without such tax relief. Other sectors of the alcoholic beverage industry have also benefitted, including wine, with tax credits and incentives resulting in expanded operations for nearly 4,000 wineries in California alone. As the 2025 legislation approaches, industry stakeholders are hopeful that Congress will recognize the positive impact the 2017 tax cuts had on economic growth and the livelihoods of those involved in the alcoholic beverage sector. They seek to communicate to lawmakers that raising excise taxes would hinder progress in the industry, particularly for small businesses, which are integral to local economies. With the stakes high, the outcome of this advocacy will be crucial for the future of the American alcoholic beverage industry as they navigate the complexities of tax policy and shifting consumer behaviors.