As a craft distiller in the Blue Ridge Mountains and president of the Virginia Distillers Association, it is rewarding to see the incredible growth in craft distilleries throughout the commonwealth. Virginia is home to nearly 70 distilleries, up from just 10 only a decade ago.
These craft distilleries are supporting economic development in every corner of our state, from the mountains to the shores and the hills to the hollers.
As Gov. Ralph Northam said recently at George Washington’s Distillery at Mount Vernon to kick off September’s Virginia Spirits Month, “Virginia is the Birthplace of American Spirits, and our distilleries continue to represent one of the fastest growing sectors of our booming beverage industry.”
While Virginia craft distillers enjoy great appreciation and support among our state leaders, inaction by legislators on Capitol Hill regarding a critical piece of legislation could jeopardize our burgeoning industry.
At the end of 2017, distillers across the nation raised a glass to toast the passage of the Craft Beverage Modernization and Tax Reform Act, legislation that provided a two-year reduction in the federal excise tax on distilled spirits.
This historic legislation marked the first reduction in the federal excise tax on distilled spirits since the Civil War. Under the legislation, the tax rate dropped from $13.50 to $2.70 for the first 100,000 proof gallons of distilled spirits produced, representing a substantial savings for small craft distillers.
These tax savings have enabled Virginia craft distillers to expand capacity and grow our businesses by hiring more employees, investing in new equipment and purchasing more from agricultural suppliers.
This two-year tax cut on distilled spirits is set to expire in less than 100 days, on Dec. 31, if the Craft Beverage Modernization and Tax Reform Act (H.R. 1175/S. 362) is not made permanent by Congress. Without its passage, craft distillers will face a 400% tax increase, which will be a devastating blow to Virginia’s craft distilling industry.
This bill has broad bipartisan support with 70 cosponsors in the Senate and 286 in the House, including U.S. Reps. Ben Cline, Elaine Luria, Donald McEachin, Denver Riggleman, Rob Wittman and Jennifer Wexton of Virginia. Sadly, our two Virginia senators and five House members are not among them. Virginia’s craft distillers and the workers we employ urge their support for this critical piece of legislation.
Virginia distilleries support 1,477 full-time equivalent jobs, a 51% increase in employment from 2016. On any given day, we are welcoming tourists to our distilleries, supporting local community events or purchasing grains from nearby farmers. In fact, nearly 70% of all grain and agricultural products used in the production of Virginia distilled spirits are sourced from Virginia.
Making this tax cut permanent will give Virginia’s craft distillers the stability and certainty we need to plan for the future, grow our businesses and continue to support our surrounding communities.