Craft beer brewers are toasting U.S. Rep. Richard E. Neal and a plan he has to save them money.
At the Barrington Brewery on Thursday, the congressman announced the Small Brewer Reinvestment and Expanding Workforce Act, a bipartisan bill that would cut excise taxes on beer in half, thus saving small breweries the money they need to grow and create more jobs in Western Massachusetts.
"They're locally owned, and they generate enormous economic activity," Neal said. "They do this, in a lot of ways, on the margins."
Currently, small breweries that produce less than 2 million barrels a year pay a $7 excise tax for each of its first 60,000 barrels of beer produced. Breweries that produce more than 60,000 barrels pay $18 per barrel in excise tax. Neal's proposed bill would cut the tax rate to $3.50 and $16, respectively.
It would also raise the number of barrels produced to qualify for the small-brewer rates from 2 million barrels to 6 million barrels.
Massachusetts brewers pay almost $1.3 million in annual excise tax, which was established in 1976, before the boom of microbreweries. It has to be recalibrated to align with today's small-time brewery operations, Neal said.
"It's a pro-growth proposal encouraging these men and women to continue to grow their business locally," he said.
Neal will introduce the act alongside Pennsylvania congressman and co-author Jim Gerlach in February.
If passed, the Small Brewer Reinvestment and Expanding Workforce Act would help regional brewers like Berkshire Brewing in South Deerfield, which paid $140,000 in excise tax last year after producing 21,000 barrels of brewed beer.
"It really is an industry that is on a growth curve," said Berkshire Brewing owner Gary Bogoff. "You find most brewers reinvest, very heavily, into their plant so that they can produce more, and hire more people."
The smell of brewing malt and the sight of frothy beer at Barrington Brewery was the ideal backdrop for Neal's plans to help small-time, local breweries.
State Rep. William "Smitty" Pignatelli was there, as were nine Massachusetts brewing companies.
"Congressman Neal, more than anybody else in Congress, has stepped up to champion the growth and the success of small brewers in Massachusetts," said Jim Koch, the founder of Sam Adams, which is brewed at the Boston Beer Co.
Barrington Brewery, which hosted Thursday's announcement after being contacted by the Massachusetts Brewers Guild last summer, is unique in that it is both a brewery and a pub, which provided the food at a social mingling between brewers and politicians after Neal's announcement.
"If it does pass, it would bring back some of the money that we're sending to the federal government," Barrington Brewery co-owner Gary Happ said. "That will enable us to do some improvements with the bottling equipment and the infrastructure."
John Friedman, an economist at Harvard University, has estimated that the Small Brewer Reinvestment and Expanding Workforce Act would generate nearly 4,400 job in the first year and an average of 300 jobs each year after that. The study also estimated the bill would generate about $153 million in economic activity in the first year and $865 million over five years.
The 33 craft breweries in Massachusetts employ 1,333 people, according to the Massachusetts Brewers Guild.
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