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Politicians Eager To Subsidize Craft Brewers

The growing popularity of craft beer has made politicians eager to subsidize the industry, even as its success has rendered those subsidies unnecessary.

York County, Virginia recently joined the growing list of government entities handing out tax dollars to microbreweries, Daily Press reported on Tuesday, when the county’s Economic Development Authority (EDA) approved a $43,000 grant to help the Virginia Beer Company open a new facility in the county.

The EDA’s incentive program “provides investments in businesses that offer high tax impact, significant capital investments and high-paying jobs,” with an expectation that investments will be repaid through increased tax revenue within two years. The Virginia Beer Company “projects the total tax revenue it will provide the county to be $23,000 the first year and $33,000 the second year.”

The company’s owners told Daily Press that they “like the Williamsburg and York County area because of the tourism draw, and they choose Virginia because state laws are now in their favor.” (RELATED: Craft Beer Conundrum: Study Says Breweries Face Barriers)

Virginia officials, though, seem less confident of their state’s attractiveness to brewers, as evidenced by an even larger incentive package detailed in US News last week by Christopher Koopman, whereby “the city of Richmond and the Commonwealth of Virginia would pour more than $35 million into a new brewery for the California-based Stone Brewing Co.”

Under the plan, Richmond will “fund, build, and then lease the brewery to Stone over the next 25 years,” but experts warn that it “has the potential to leave the city with ‘a long-term liability’ if the brewer were to leave within the next 15 years.”

Even the federal government is getting in on the act. Oklahoma Republican Sen. Tom Coburn’s 2014 “Wastebook“, which highlights wasteful government spending, identified a $200,000 Department of Agriculture grant to help Empire Brewing open a second facility in New York State. (RELATED: Coburn Identifies $345 Million in Corporate Subsidies)

The subsidy was awarded despite the fact that “the U.S. craft beer market was $14.3 billion” in 2013, and the acknowledgement by Sen. Chuck Schumer, who supports the subsidy, that, “The craft brew industry is booming in Central New York, and Empire is one of the breweries leading the way.”

In fact, there is ample evidence that microbreweries are doing fine on their own, and do not need government handouts. (RELATED: Hipster Craft Brewery Causes Count Chocula Shortage)

In Arkansas, according to THV 11, “local breweries are getting help up front through grassroots investor programs like Kickstarter, and they’re fueling a beer boom that’s changing the face of Little Rock.”

“People are excited to have local beer choices,” one brewer explained, adding that, “crowd-funding has been a wonderful way to do that,” thanks to enthusiastic support from the local community.

Koopman suggests that the enthusiasm among elected officials for subsidizing craft brewers is related to the desire of politicians “to associate themselves with popular things,” which he says is the same impulse that has helped fuel the “explosion in public financing for stadiums across the country.”

However, “if politicians are really interested in fostering the current craft-brewing renaissance,” Koopman argues, “they should shift their focus away from subsidizing select breweries and instead work to simplify the regulatory environment for all those hoping to brew their beer.”

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