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Senate Co-Sponsorship Memoranda
Senate of Pennsylvania
Session of 2023 - 2024
Regular Session
MEMORANDUM
| Posted: | June 5, 2024 04:15 PM |
|---|---|
| From: | Senator Ryan P. Aument |
| To: | All Senate members |
| Subject: | Updating the Malt Beverage Excise Tax Credit to encourage economic development for PA brewers |
| Given its rich history, access to quality products, favorable regulatory environment and abundance of transportation modes for exporting, Pennsylvania is one of the most attractive places in the United States to open a new brewery. In fact, according to the National Brewers Association, Pennsylvania ranks second in the country in barrels of craft beer produced annually. We are home to more than 400 breweries which, counting ancillary industries, employs tens of thousands and people and is responsible for more than $2 billion in economic activity per year. Part of the reason for such tremendous growth of this industry in the Commonwealth is the Malt Beverage Excise Tax Credit, which allows qualified capital investments in breweries to offset some of the malt beverage tax liability the brewery incurs through production of its product. The industry has found that these savings flow into new investments in infrastructure and staff by PA breweries, further solidifying their stake in Pennsylvania’s future. However, while this tax credit has provided incentive to many breweries, the structure of it has made its benefits unattainable to smaller breweries. With all other states chasing the success the Commonwealth has experienced in attracting these desirable businesses, we need to make sure we are staying competitive for not only new breweries, but for those that want to expand their operations here. In the near future, I plan to introduce legislation to improve this tax credit by making it sellable to other Pennsylvania brewers. Currently, the Malt Beverage Excise Tax Credit is the only Pennsylvania tax credit that is not sellable, so this change would make the credit consistent with all other tax credits. This program is already capped at $5 million annually and my legislation will not change that; nor will it alter any other tenants of the program relating to percentage of liability that can be credited or the carry forward for the credit. What this legislation will do is allow breweries with high opening or expansion costs to claim the credit and sell the portion of the credit it cannot use based on its existing malt beverage excise tax liability. As one brewer told me recently, he invested $80,000 in capital improvements to his brewery but would only have about $1,500 in excise tax liability for the year. He explained the bureaucratically burdensome process and the relatively low credit amount simply wasn’t worth pursuing. But, if he could sell the credit and realize cash for that credit, it could put needed capital back into his operation immediately. This is the purpose of the legislation; to ensure that the Commonwealth provide meaningful incentives to these small businesses not only locate here in Pennsylvania, but to expand here as well. I hope you will join me in supporting the Pennsylvania craft beer industry and cosponsor this legislation. |