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Legislative Memo

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BILL:

S.7728 (Zeldin) / A.10695 (Brindisi)
Governor's Program Bill #42

  Support

SUBJECT:

Beer Production and Beer Label Tax Credits

 

S.7728 (Zeldin) / A.10695 (Brindisi)
Governor's Program Bill #42

DATE:

June 22, 2012

 

The Business Council of New York State, Inc. supports S.7728 (Zeldin)/A.10695 (Brindisi) that would offset unanticipated taxes and fees placed on New York State brewers following a recent Supreme Court ruling. These unanticipated additional expenses to brewers come at a time when the industry is starting to take off and grow in number, production and employment.

In Shelton v. NYS Liquor Authority & NYS Department of Taxation and Finance, the court ruled that Section 424(6) of the NYS Tax Law which allowed a tax exemption for the first 6.2 million gallons of beer produced in New York State was unconstitutional; as part of the settlement the State Liquor Authority also ended the Beer Label tax exemption.

New York breweries have grown over the years and the state is now home to over 70 breweries that directly employ just under 3,000 people. The courtís recent ruling will seriously impact the industryís ability to continue to grow when they have recently been receiving a lot of attention for their products and in some cases as tourist destinations. This legislation will neutralize the impact for New York State brewers that produce less than 60 million gallons of beer per year by creating a tax credit equal to $0.14/gallon for the first 500,000 gallons of beer produced in New York State and $0.045 after.  No credit would be given for beer produced in excess of 15.5 million gallons.

This legislation also includes a Beer Label Credit for labels registered with the State Liquor Authority.  Small breweries that produce beer in batches of $1,500 barrels or less would be exempt from the registration fee; this would apply to both in and out of state brewers.  Following the Courtís ruling the State Liquor Authority had issued new regulations ending this $150 exemption. 

The New York brewing industry is vital to improving this stateís economy and it is imperative to support the industry as they are growing.  Breweries are part of this stateís diverse economy. The unanticipated costs of doing business in New York State for members of this industry, as a consequence of a law being ruled unconstitutional, should not be left unaddressed. For these reasons The Business Council supports passage of this legislation.