A coalition of alcohol producers, including Anheuser-Busch and MillerCoors, are turning up the heat on Congress to make permanent new tax cuts they won as part of the 2017 tax overhaul.

The 2017 law gave beer, wine, and spirits producers a two-year federal excise tax reduction worth $4.2 billion—with the deepest cuts going to small domestic brewers, whose tax rates were halved to $3.50 from $7 per barrel on the first 60,000 barrels.

The benefit is set to expire at the end of 2019, and brewers, cider makers, vintners, and distilleries are intent on maintaining it.

“Now it’s our time to go back up to the Hill and show them this was a great idea,” said Jim McGreevy, president and CEO of the Beer Institute, which represents both large and small brewers.

At the very least, the coalition—which includes other trade groups like the Brewers Association, WineAmerica, the Wine Institute, the Distilled Spirits Council, the American Craft Spirits Association, and the U.S. Association of Cider Makers—want the tax breaks extended.

But the industry prefers that they be made permanent, so producers have the certainty for making long-term business decisions.

Tariff Pain

President Donald Trump’s trade policies have added a level of urgency to retaining the excise tax relief. The president’s 10 percent tariff on foreign companies that send aluminum to the U.S. has hurt American brewers, who saw their aluminum costs skyrocket, McGreevy said.

The 2017 tax law reduced the beer industry’s federal excise taxes by $130 million per year for 2018 and 2019, but the tariffs are costing about three times that much per year, he said. “That’s one of the main reasons, in my view, why it’s important that the excise tax relief can get extended or be made permanent.”

Brewers aren’t alone in this concern. In retaliation to Trump’s trade policies, China imposed a 25 percent tariff on U.S whiskeys.

“Many of our craft spirits producers, knowing how difficult it is to get products on shelves and into restaurants here in the United States had, as part of their business plans, anywhere from 25 to 30 percent of their overall revenues coming directly from exports,” Margie A.S. Lehrman, CEO of the American Craft Spirits Association, told Bloomberg Tax. “Many of those same craft distillers who had that as a business model last year had to drop that and in fact realized between only 10 to 15 percent because of the tariffs that were imposed on whiskey.”

Lobbying by the Numbers

The lobbying push began well before this year but is expected to pick up in the coming months.

Anheuser-Busch Cos., and at least seven firms lobbying on its behalf, spent at least $4.7 million in 2018 lobbying on issues that included excise taxes, according to data compiled by Bloomberg Government. MillerCoors LLC spent about $3.3 million.

Tobacco giant Altria Group Inc., which has been expanding its brand into the alcohol sector, spent about $5.4 million lobbying on issues including alcohol taxes in the last two quarters of 2018 alone.

The trade groups also spent millions on the effort. The Beer Institute spent $3.3 million lobbying on excise taxes and other issues in 2018. The Distilled Spirits Council, and other firms on its behalf, spent about $4.9 million. And the Wine Institute and Wine America combined spent at least $460,000.

Leaders of trade groups that represent smaller alcohol producers said having large multinationals like Anheuser-Busch and MillerCoors on their side has given them the extra muscle they’ve needed to be heard on Capitol Hill.

“For years we pushed a bill solely focusing on small brewers and routinely heard from our congressional champions that we needed to be part of a larger coalition to achieve our goals for our members,” said Bob Pease, president and CEO of the Brewers Association.

On the 2017 tax cut: “I’m not certain we would have gotten there without our brethren that are the big brands,” Lehrman told Bloomberg Tax.

Legislative Effort Underway

These groups have been heard loud and clear.

Sens. Ron Wyden (D-Ore.) and Roy Blunt (R-Mo.) introduced the Craft Beverage Modernization and Tax Reform Act of 2019 Feb. 6 to make the tax breaks for alcohol producers permanent.

The House is to get its own bill the week of Feb. 11, led by Reps. Ron Kind (D-Wis.) and Mike Kelly (R-Pa.).

“Time is of the essence,” Kind told Bloomberg Tax Feb. 8. “We’re trying to get something permanent in the tax code for the sake of these breweries and microbreweries.”

He said the craft beverage provisions would likely be added to whatever tax extenders package lawmakers pull together. Some policy makers, including Senate Finance Committee Chairman Chuck Grassley (R-Iowa), have been pushing to add extenders to the upcoming spending bill. Many of the tax breaks for other industries, such as biofuels, expired after 2017 and would need to be renewed retroactively for individuals and businesses to claim them on their 2018 tax returns this filing season.

Kind said he’s talking to House Ways and Means Committee Chairman Richard Neal (D-Mass.) about the tax breaks for the alcohol industry but thinks extenders as a whole should be debated in hearings, with the goal of making some permanent and eliminating the rest.

In the meantime, trade groups for wine, beer, cider, and spirits are keeping up the pressure on Congress.

Pease said the Brewers Association will be organizing a “Hill Climb” to have members tell their stories directly to their lawmakers. The group has 5,100 individual stories that can be told, he said. It also plans to ramp up efforts to talk to new lawmakers and bring them in as co-sponsors of the craft beverage legislation—replacing allies who retired from politics, ran for a different office, or lost their re-election bids.

Members of the Distilled Spirits Council and the American Craft Spirits Association will be on Capitol Hill July 22-24.

The strategy is that the fly-in will occur right before Congress leaves for its summer recess, Lehrman said. “So perhaps we can be the foremost thing on their mind when they’re leaving.”

Daniel Kleban, founder of Maine Beer Co. LLC, said his brewery received a $68,000 annual tax break from the 2017 tax law changes. Losing that benefit would be a significant setback for his and other breweries in Maine, he told Bloomberg Tax.

“The success of breweries in Maine has directly helped our state by creating jobs, increasing tourism, and boosting other local industries,” he said.