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Alcohol beverage firms unite to oppose user fees.

For the first time in recent memory the NBWA and DISCUS are on the same page. Both recently signed a letter to Congress protesting a proposal to impose user fees on companies that produce, import and sell alcohol beverages.

"The user fees would be imposed on businesses for federally-required activities," notes NBWA president David Rehr, "constituting nothing more than an additional tax on an industry that already pays billions in federal excise taxes.

In the letter, sent to the Chair and Ranking Member of the U.S. House Appropriations Subcommittee on Transportation, Treasury, Housing and Urban Development, Judiciary, District of Columbia and Independent Agencies, the industry allies stated, "The imposition of user fees will adversely impact those who can least afford it. The vast majority of vintners, brewers, distillers, and importers are small companies, many sole proprietors, who simply won't be able to afford the fees. Our associations and their thousands small and large business members are united in our effort to defeat this proposal."

In a key paragraph, the letter notes the high tax burden already imposed on makers and sellers of alcoholic beverages, wit: "Vintners, brewers, distillers, and importers already pay about $8.5 billion excise taxes each year to the Federal Treasury. Requiring the payment of fees for federally-required activities constitutes nothing more than an additional tax. TTB's proposed budget of $91 million represents less than 1.1% of the total excise taxes paid by the alcohol beverage industry members, leaving 98.9% available to the government to support national defense, domestic programs, etc."

Under the proposal, which is outlined in President George Bush's budget for Fiscal Year 2006, the TTB would be authorized to collect fees for a variety of functions, including: applications for authorization to produce, import, or sell at wholesale, alcohol beverages; applications for certificates of label approval and applications for formula approval from the TTB laboratories.

The letter expressed astonishment that these required items should be charged to companies seeking to comply. "Permits, Certificates of Label Approval, formula applications, and the like are all required by the Federal Alcohol Administration Act and/or TTB regulations," the letter noted. "User fees are completely inappropriate and unjustified for members of our industry. There is absolutely no discretion in obtaining the permits and label approvals that TTB would be charging for under this proposal. These applications are not 'services.' They are required by law as a condition of doing business and are not "benefits" to the industry, as characterized by the President's Budget. These requirements are an integral part of the Federal Government's enforcement of its alcohol beverage laws and regulations. It is inconsistent with conventional logic to pay a fee for activities that 'protect the public' and at the same time claim they are 'industry benefits.' The term 'protect the public' used in TTB's budget and its strategic plan makes it clear that these activities are a condition for doing business and are performed to make sure that the laws and regulations, written to protect consumer interests, are followed by industry members. For example, label certificate applications may be denied because TTB believes that the proposed label does not comply with the Federal Alcohol Administration Act and/or the TTB labeling regulations.

The letter added, "We have grave concerns that authorizing the imposition of user fees will result in the charging of taxes for activities not currently envisioned. Once authorized, Treasury and TTB could impose these taxes on other activities, such as interpreting regulations, advice to industry members on compliance issues and the like," wrote the industry allies.

In their letter, the groups urged subcommittee members to continue to support the funding of alcohol law enforcement, which is currently the responsibility of the TTB, from the Treasury General Fund as has been the case since Repeal in 1933.

Signatories included the Wine Institute, Wine America, Wine and Spirits Wholesalers, Beer Institute, Brewers Association, NBWA, National Association of Beverage Importers, Flavor and Extract Manufacturers Assoc. and DISCUS.
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Publication:Modern Brewery Age
Geographic Code:1USA
Date:May 16, 2005
Words:661
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