New law retains tax breaks, offers growth possibilities
By Joseph Spector, Democrat and Chronicle
ALBANY — Gov. Andrew Cuomo on Wednesday signed legislation that would keep tax breaks for craft brewers in the state.
The state Legislature and Cuomo in June reached a deal to retain the tax benefits after a court settlement in March would have forced higher taxes for in-state brewers compared with those in other states.
The legislation calls for keeping a tax break for small breweries and exempts out-of-state brewers from paying an annual state liquor fee. The law also creates a farm brewery license to allow craft brewers to open restaurants and sell additional products.
Breweries in New York were angered by the March settlement that would have required them to pay 14 cents in state tax per gallon in addition to a 12-cents-per-gallon tax for beer sold in New York City, officials said. The agreement drops the fee.
“In addition to producing some of the finest beer in the world, New York’s craft breweries are creating jobs, supporting our state’s farmers and hops growers, as well as bringing in tourism dollars in local communities across New York,” Cuomo said in a statement.
The law allows any brewery that produces 60 million or fewer gallons of beer in New York to get a refundable tax credit on personal income and business taxes. It also exempts small brewers from the $150 annual brand label fee.
The tax credit is 14 cents per gallon for the first 500,000 gallons produced and 4.5 cents per gallon for the next 15 million gallons produced in the state.
Without the tax credit, some brewers would have struggled to survive, industry officials said. For others, it would have put a dent in their ability to hire workers, they said.
Rich Lozyniak, CEO of North American Breweries, the Rochester-based producer of Genesee and a dozen other brands, said the tax would have been about $900,000 a year for his company, adding “that’s a lot of people.”
The company has been an upstate success story after struggling several years ago. Since 2009, North American has grown from about 330 employees to more than 700, Lozyniak said. It is soon opening a brew house and museum. It produces about 20 million gallons of beer a year.
“If you look at where the growth of employment is occurring in the beer industry, it’s all the craft breweries and the regional breweries like Genesee,” Lozyniak said. “The expense this would have hit us with would have been huge.”
The state estimates that New York’s craft brewing industry includes more than 90 breweries, employs thousands of people and produces more than $200 million of economic activity each year.
“This legislation will help ensure that the state’s thriving craft beer industry can continue to deliver jobs, revenue and pride for New York,” said David Katleski, president of the state Brewers Association.
The law creates a farm brewery license similar to one for the state’s farm wineries. It will allow farm breweries to sell New York-labeled beer, wine and liquor at their stores and in some cases off premises, such as at restaurants and events.
Copyright 2012 Democrat and Chronicle