The Trump administration just eliminated a major tax break for wineries and spirits companies who both import and export their wares. On Monday (12.17), the Treasury Department announced the end of “excise drawbacks,” a program that provides producers a rebate on import taxes and fees if they have already paid export charges.
Under the old system, created in 2004 by the Customs and Border Control office in San Francisco, U.S. based producers paid an excise tax on exports, but if they imported “like products,” they were allowed to claim a refund on said import taxes. The rule also allowed American winemakers who did not pay the excise tax to claim a refund on exports nonetheless.
The Trump team contended that the system incentivized the purchase of foreign goods in America. (The change also is projected to increase federal taxes coffers by some $600 million dollars.)
Needless to say, the Distilled Spirits Council did not agree with that assessment. In fact, the trade organization countered that Congress specifically protected the drawbacks within the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA).
“Congress wanted to encourage production in the United States with duty drawback, which was designed to incentivize U.S. manufacturers to export,” said Distilled Spirits Council President & CEO Chris Swonger.“At a time when retaliatory tariffs are impacting American business, small and large, this program could provide some relief, simplification, and add to our competitiveness. Treasury needs to follow Congressional intent and stop impeding a program that levels the playing field for U.S. manufacturers in the global market.”
Friction between the executive and the U.S. alcohol industry was a theme in 2018. In response to import tariffs imposed by the Trump administration, China and European nations retaliated with massive counter-tariff packages including taxes on wines and American Whiskey.