WASHINGTON — U.S. Rep. Steve Womack, R-Rogers, has thrust himself in the middle of a longstanding Capitol Hill dogfight between the nation’s largest beer producers and smaller breweries.

WASHINGTON — U.S. Rep. Steve Womack, R-Rogers, has thrust himself in the middle of a longstanding Capitol Hill dogfight between the nation’s largest beer producers and smaller breweries.

The Republican lawmaker from Rogers recently introduced legislation to reduce the $18 per barrel federal excise tax that brewers pay on most beer sold in the United States. Smaller brewers — those producing less than 2 million barrels a year — pay $7 a barrel on the first 60,000 barrels and then $18 after that.

The beer industry has been lobbying for relief since 1990 when the tax was last increased as part of a deficit reduction agreement by Congress and then-President George H.W. Bush. The $18 barrel fee works out to about 33 cents on a six-pack.

Bills have been introduced in every Congress since but have largely been ignored. Two factions within the industry have emerged in the last decade seeking substantially different relief.

The nation’s largest brewers have supported cutting the tax in half for all — the BEER Act. Meanwhile, small and independent craft brewers want to reduce the tax for themselves while leaving the nation’s biggest brewers to pay the current rate — the Small BREW Act.

Enter Womack, who last week introduced the Fair BEER Act that seeks a middle ground between the two factions.

The bill, which he introduced with Rep. Ron Kind, D-Wis., would eliminate the 2 million barrels production cap and institute a graduated fee structure for all.

Under their plan:

—No excise tax would be owed on the first 7,143 barrels.

—$3.50 per barrel would be owed on barrels 7,144 to 60,000.

—$16 per barrel would be owed on barrels 60,001 to 2 million.

—And additional barrels above that would be assessed the $18 fee.

"This comprehensive reform bill supports brewpubs, microbrewers, national craft brewers, major brewers, and importers alike and encourages their entrepreneurial spirit, which is exactly the spirit we need to get America’s economic engine going again," Womack said.

The Beer Institute, a trade association supported by the largest brewers, is supporting the legislation.

"This bill is important for reforming a hidden tax that most beer drinkers don’t even know they pay, and because it removes barriers to industry growth. The Fair BEER Act deserves support, because it offers fair reform of the federal beer tax, but it reaches that reform without completely changing the industry structure," association’s president and CEO Jim McGreevy said in a statement.

The Brewers Association, representing independent and craft breweries, issued a statement opposing it.

"We stand firmly rooted in our support for the Small BREW Act, fair legislation that will allow small brewers to remain competitive in the marketplace, reinvest in their businesses, reinvigorate local economies and continue their role in rejuvenating the job market in the U.S.," said Bob Pease, the association’s CEO.

"The BEER Act gives further tax advantages to multinational brewing companies that not only already pay lower rates than purely domestic brewers, but also have cut thousands of U.S. jobs in the past six years and export and shelter their U.S. profits," he said.

The Small BREW Act, introduced earlier this year by Sens. Ben Cardin, D-Md., and Susan Collins, R-Maine, includes a similar scaled approach to the beer tax but only for small brewers. Under their plan, small brewers are defined as those producing less than 6 million barrels a year — a higher production cap than the current 2 million.

Raising the cap to 6 million would benefit five brewers that produce between 2 million and six million barrels. Those brewers — brands Pabst, Guiness, LaBatt, Sam Adams and Yuengling — would pocket about $4.7 million a year in reduced taxes.

Only four brewers — brands Budweiser, Coors, Corona and Heineken — exceed the 6 million barrel level. Under the Small Brew Act, they would receive no tax break.

Womack’s bill, which eliminates the production cap, would provide nearly $4.8 million in annual relief to the nine major brewers, while also providing more than $50 million a year for the thousands of smaller breweries, microbreweries and brew pubs across the nation.

Claire Burghoff, a spokeswoman for Womack, said that his legislation actually provides more relief to the smallest brewers than is offered in the Small BREW Act. Under his proposal no excise tax is charged on the first 7,143 barrels, while the Small BREW Act would charge $3.50 — a potential cost of $25,000.

"Ninety percent of American brewers brew less than 7,143 barrels a year," she said. "And, according to our industry sources in the state this includes all Arkansas breweries."

The savings, Burghoff said, could allow them to reinvest and grow so that hopefully they can become a medium, or even a large, producer someday.

Steve Rehbock, owner of Saddlebock Brewery in Springdale, said small businesses like his "can use any break we can get." Rehbock also said he supports Womack’s bill, but he was more in favor of the Small BREW Act.

Rehbock went on to explain that the Womack-sponsored bill "will generate jobs at a very low cost " because small breweries are not as automated as the very large breweries. As a brewery gets big, the work tends to get very automated, he said.

"It makes sense for larger breweries to pay more beer tax because they tend to reduce our workforce," Rehbock said. "The amount of tax paid by small breweries is seen more in payroll taxes. I can tell you that I pay more in payroll tax than I pay in beer tax. The amount of tax paid overall is still far more of a burden on the small brewer, or any small business owner, than the larger corporations."


Times Record reporter John Lovett contributed to this report.