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Raising the Excise Tax on Wine

Excise taxes seem to be another form of taxation that people pay without realizing they are paying another tax. For most of us, when we purchase a bottle of wine we already are paying a sales tax on the wine and therefore the fact that another tax is included in the price of the wine is not apparent.  The federal government puts on an excise tax and then states follow suit by adding another excise tax. The federal excise tax on wine remains consistent, 21 cents per bottle if the wine is less than 14 percent alcohol, then increases to 31 cents and 62 cents a bottle depending on the percentage of alcohol, and more for sparkling wines. Each state has a different excise tax which can vary from about 3 cents a bottle to as much as 50 cents a bottle for a table wine. Who pays this excise tax? The winery pays the excise tax and eventually the consumer will pay. Governor Paterson of New York wants to triple the excise tax on alcohol by changing it from 19 cents to 51 cents per gallon (about 4 cents to about 10 cents a bottle). By doing so, he is putting a substantial burden on the smaller wineries that produce perhaps 10,000 bottles. These wineries will have to pay about $9,600 more each year. Will this force the smaller wineries out of business? With an economic downturn, it has been noted that many wine consumers are purchasing less expensive wines. How many other states will increase the excise tax on alcohol? If  the prices of wine go up, consumers may decide to switch to less expensive wines coming in from other countries. I believe state governments should be supportive of  small businesses in America. I’d like to hear your opinions about increasing excise taxes on alcohol.

3 Comments

  1. Eric
    Posted January 28, 2009 at 7:41 pm | Permalink

    Kathy-You think Governor Paterson is bad? How about Governor Scharzenegger’s call to raise California’s excise tax from 20 cents a gallon to $1.48 a gallon! But with a huge state deficit, they’ve got to raise money somehow and taxation is the easiest way. Besides, producers pass taxes along to importers, distributors, retailers and ultimately to the consumer. I don’t know too many people that will stop drinking wine if the cost of their favorite goes up another 6 cent a bottle. Your thoughts?

    Eric

  2. Eric
    Posted January 28, 2009 at 8:09 pm | Permalink

    Kathy-I missed this the first time in your comments on excise taxes. The excise tax applies to all wines, domestic or imported, so all are on equal ground with tax increases. Currency fluctuation and transportation costs play a bigger role in the cost of imported vs. domestic wine than excise taxes do. Eric

  3. Kathy
    Posted January 29, 2009 at 3:15 pm | Permalink

    Thanks for your viewpoint about excise taxes.

    You are right that the wineries will pass on the cost to the consumer. Isn’t that the way taxes always are? It always seems to be the government’s answer to problems. It is almost like double taxation with Federal excise tax, state excise tax and then consumers paying a sales tax.

    One of the reasons I am against the increase of excise taxes is that I believe local wineries of all sizes add to the economy by promoting tourism. States benefit from increased tourism that requires lodging, restaurants and gift shops. More employment opportunities and increased sales taxes just to name two. Governments should do as many families do when times are tough, cut back not spend more.

    The increase of excise taxes combined with the cutting of funding for the New York Wine and Grape Foundation by the state of New York is showing a lack of respect for what the New York wine industry does for the state.

    Mariah Sparks of http://www.cnwinecom in an article, “ Proposed budget could impact wineries,” quotes Chris Stamp, President of Lakewood Vineyards. “For the 80,000 gallons we make at the Lakewood Vineyards, in addition to the excise tax we already have to pay, we’re going to have to pay $24,000 in taxes.”

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