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Could a looming tax hike put small breweries out of business?

small brewery
Posted at 9:35 PM, Dec 13, 2020
and last updated 2020-12-14 00:18:51-05

CLEVELAND — The COVID-19 pandemic has already put many local bars and restaurants on the brink of closing and an expiring tax break could put some small breweries out of business for good.

“It’s really important right now to support our local brewers and the people who employ our locals,” Katie Brabenec said.

Few businesses have remained unscathed in the economic turbulence of 2020.

“This has definitely gone on a lot longer than anyone envisioned when this first happened back in March,” Richard Skains said. “So it is very worrisome as it continues to drag on.”

For thousands of brewery owners like Skains who have endured closures, limited capacity and curfews, the financial troubles may be exacerbated at the end of this calendar year.

“We now pay $3.50 per barrel. Three dollars and fifty cents,” Skains said. “Now when we hit Jan. 1 it is set to double again.”

The Craft Beverage Modernization and Tax Reform Act, which lowers taxes on beer, is set to expire Dec. 31.

“Think about someone doubling your own personal taxes,” Skains said. “It’s a hit. It’s a big hit.”

Skains and brewery owners alike have been forced to wonder what’s to come in just three weeks.

“In addition to that, we’re facing an aluminum shortage so the price on our aluminum cans has gone up,” Skains said.

Avid beer drinkers said extending the current tax rate is the only hope for small breweries to keep their doors open.

“We don’t want to see any of our local breweries close,” Bill Birch said. “We want to support them. Much more than your big box.”

Brabenec echoed that sentiment Sunday.

“They’re barely getting by,” Brabenec said. “They’re struggling to pay their employees so the fact that they might have to pay double taxes is awful.”

Senators Rob Portman and Sherrod Brown were among more than 50 lawmakers who signed a bipartisan letter to Mitch McConnell and Chuck Schumer urging them to include the current tax rate in upcoming legislation, rather than raising the costs for business owners.

Senator Brown’s office shared the following statement with News 5:

“Senator Brown has been pushing to extend the current tax rates for the craft brewing industry. Ohio’s breweries employ thousands of people and the lower tax rates have helped them hire new employees, purchase new equipment and upgrade their facilities. The industry can’t weather a sudden tax hike on top of the devastating effects of COVID-19. Extending the current tax rates is a top priority for Sen. Brown.”

Skains agreed he and fellow small business owners cannot endure much more.

“We’re feeling it. We’re feeling the pinch,” Skains said. “And we’re getting whacked from different places.”