Tax break bill could aid state’s craft distillers

EVERETT — Local craft liquors springing up on store shelves could get a little cheaper, and the distillers would have a better chance to survive and thrive, if a new bill is approved in Congress, proponents say.

The bill, sponsored by U.S. Rep. Rick Larsen, D-Wash., would cut federal taxes for distilleries that produce fewer than 60,000 gallons per year. Freshman Democratic Rep. Suzan DelBene, who represents eastern Snohomish County as part of the state’s 1st Congressional District, is a co-sponsor.

Small distilleries currently pay the same federal tax as larger distillery companies that mass produce their liquor, while small breweries and wineries pay a significantly smaller tax rate than their larger competitors, Larsen said.

It’s important here because Washington state now has more than 60 craft distilleries. That’s the most of any state in the nation, Larsen and DelBene said at a press conference at Bluewater Organic Distilling in Everett on Thursday.

A fifth of vodka made by Bluewater currently retails for about $29.50, owner John Lundin said. The change could knock between $2 and $3 off the price per fifth, he said. This would cut his costs at the outset and potentially increase sales, he said.

“The market even for high-quality products is very much price driven, and being more competitive and being able to present a high quality product at a lower price is huge for us,” Lundin said.

Craft distilled spirits are generally more expensive than the name brands.

“It’s like everything handmade — it tastes better, it costs more,” said David Hopkins, co-founder of Skip Rock Distillers of Snohomish. The company makes vodka, white whiskey and liqueurs.

Hopkins said the tax cut could help his business “tremendously.”

The bill would cut the current federal tax of $2.14 per fifth of hard liquor down to about 64 cents. Because the tax is levied at more than one distribution point along the way, the savings would likely be greater than the reduction of $1.50 per bottle, Lundin said.

Also, “it could mean the difference between signing a distribution deal or not, and this is really a volume game,” he said. “Our margins are always going to be tight. It’s a huge difference for us.”

Larsen said the matter came to his attention last year when he visited Bluewater, located next to the Scuttlebutt brewery on the Everett waterfront, on a tour of small businesses.

There are 12 small distilleries in his district, he said. The 2nd Congressional district stretches from the Snohomish County-King line to Bellingham along the water.

DelBene, of Medina, said there are nine craft distilleries in her district, which runs from King County to the Canadian border, east of Larsen’s.

Most of the craft distilleries fired up after a new state law in 2008 cut the annual license fee to $100 a year for small distilleries, compared to $2,000 for larger ones. A distillery must obtain at least half its ingredients from within the state to receive the break.

That’s all the more reason to help those businesses, said DelBene, former director of the state Department of Revenue.

“It’s the multiplier effect when many of the ingredients they’re using are from right here in Washington state,” she said.

Neither Larsen nor DelBene said they’d received much feedback from their colleagues in Congress regarding the prospects of the bill, but have no reason to believe it wouldn’t pass.

A similar bill recently failed in Congress but it set the threshold for small distillers at a higher volume, Larsen said.

He said it might take awhile to get the bill through.

“It takes longer to pass a bill than it does to make a bottle of gin here at Bluewater,” he said.

Bill Sheets: 425-339-3439; sheets@heraldnet.com.

More in Local News

Lake Stevens man shot by deputies reportedly was suicidal

The fatal shooting is the latest incident where someone apparently wanted police to fire.

Man suspected of robbing Rite Aids

Mill Creek police released a sketch Monday evening of the suspect.

Teen charged with murder in shooting over car

A Lynnwood teen has been charged with second-degree murder for… Continue reading

Police looking for Lynnwood bank robber

The robber did not flash a weapon to the teller at a U.S. Bank.

Here’s how much property taxes will rise to pay for schools

The owner of a $350,000 home is looking at a property-tax hike of nearly $300 this year.

Everett man accused of causing his baby’s brain damage

He told police he shook his son to get him to stop crying, and the boy slipped out of his hands.

At one point she dropped out; now she’s graduation-bound

Anita Bradford-Diaz has had her share of setbacks, but they only seem to increase her motivation.

Mayor, others break ground on low-barrier housing in Everett

Somers: The complex is expected to save lives and “really shows the heart of this community.”

Employee threats caused lockdown at Arlington elementary

Arlington Police said all students and staff were.

Most Read