Politics

Hard Cider Gets New Definition Under Two-Year Tax Extender Bill

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Juliegrace Brufke Capitol Hill Reporter

Hard Cider may be getting a tax break.

The two-year tax extender legislation introduced by House Ways and Means Committee Chairman Kevin Brady Monday would redefine the beverage as a wine for the purpose of the excise tax.

Under current law, hard cider is only allowed up to 7 percent alcohol by volume (ABV) and can’t contain carbonation levels over 0.392 grams per 100 milliliters before it is subjected to a higher excise tax ranging between $3.30 and $3.40 per gallon.

The bill would give hard cider producers a little more leeway by allowing the its ABV to range from 0.5 percent and 8.5 percent and up the carbonation levels, allowing it to go up to 6.4 grams per liter.

The drink would also be required to be derived largely from “apples, apple juice concentrate, pears, or pear juice concentrate, in combination with water.”

According to Nielsen ratings, the beverage’s popularity has skyrocketed in recent years, growing by 71 percent in 2014 alone.

Manufacturers of the drink have complained by using fruit, it makes it difficult to control the alcohol content.

“Because many cider producers are small, craft operators, who rely on natural raw materials, they often have little ability to predict and control the precise alcohol content and carbonation level of their product,” the United States Association of Cider Makers said in a statement. “Meanwhile, cider consumers expect a somewhat high level of carbonation equivalent to that of most beer.”

Cider isn’t the only beverage that is poised to receive some tax relief.

Rum distilleries on Puerto Rico and the Virgin Islands will also get a tax break under the bill.

The measure would extend the federal excise tax of $13.25 per proof-gallon  cover-over paid the territories treasuries on rum imported to the mainland.

Puerto Rico, which is facing a financial crisis, uses rum-back bonds to guarantee the commonwealth’s debt.

“Compounding perverse subsidy incentives, the rum cover-over program has created budgeting shortfalls,” the Tax Foundation, a Washington-based think tank said. “The treasuries of Puerto Rico and the U.S. Virgin Islands are reliant on these federal transfers as part of their yearly revenue.”

The provision would be extended through 2016.

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