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Distillers rushing to make hand sanitizers are now seeking a tax break

Doug Sword, CQ-Roll Call on

Published in Business News

WASHINGTON -- Looking for a nice single-malt hand sanitizer? Or maybe something in a vodka or gin?

Hundreds of liquor distillers say they have already begun -- or are planning -- to turn over a portion of their liquor production to addressing the nationwide shortage of another alcohol-intensive product -- hand sanitizers.

"There's well over 350-plus distillers around the country that have been mobilizing ... pivoting to take their distilled spirits and make hand sanitizers," said Chris Swonger, president and chief executive of the Distilled Spirits Council, a Washington-based association.

Now, distillers want an exemption on a tax that's typically levied on spirit production.

The Distilled Spirits Council is lobbying to get an add to the $2 trillion coronavirus economic relief package being negotiated in Congress that would exempt any of the hand sanitizers made by distillers from the $13.50 per proof gallon federal excise tax on liquor products.

A proof gallon is a gallon of 100-proof liquor, which amounts to 50 percent alcohol in content. Distillers would actually have to beef up their alcohol content since the Centers for Disease Control and Prevention says the ethanol content of hand sanitizers must be at least 60 percent alcohol to be effective against COVID-19.

 

Small distillers already pay just $2.70 per proof gallon because they receive an 80 percent cut in the federal excise tax thanks to the fiscal 2020 spending law. But that's just on the first 100,000 proof gallons they make. Above that they pay the full $13.50 per gallon.

Swonger says he has seen "broad bipartisan support" to add the waiver of the excise tax.

There are at least a few supporters for the exemption in Congress. "We have a lot of distillers in our state, and God bless them," Tennessee Republican Marsha Blackburn said on the Senate floor Tuesday. "They're stepping up, and instead of distilling whiskey, they are moving to sanitizers. And, yes, to those distillers, we know there is an excise tax problem, and we are on it trying to resolve that for you."

Another big supporter is Rep. John Yarmuth, chairman of the House Budget Committee. The Kentucky Democrat represents Louisville, which is home to two large distilleries that are already making hand sanitizer.

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