THREE REACTIONS : Alcohol Tax Will Hurt Cheaper Brands Most
Plans to boost taxes on alcohol prompted many to predict a decline in the consumption of wine, beer and distilled spirits--particularly the lower-priced products--which would add to industry woes brought by a new sobriety among health-conscious consumers.
The industry in California already is dreading November, when the ballot carries two propositions that would significantly increase alcohol taxes.
“It’s going to be a severe blow to the wine industry in California,” said Jerry Vorpahl, vice president of the Wine Institute in San Francisco. “A lot of wineries I’ve been talking to are saying they don’t know how they’re going to stay in business.” Wineries that produce 200,000 gallons or less a year would be exempted from the tax.
“A tax on beer or soft drinks or newspapers or anything that ordinary people use every day is a very regressive tax,” said Fritz Maytag, owner of San Francisco-based Anchor Brewing Co., the nation’s largest micro-brewery, which makes Anchor Steam Beer. “The definition of a democracy is a place where the beer drinkers vote.”
The tax increases, industry officials note, are levied at the producer level, as the beverages leave the brewery, winery or distillery. Imported products would be taxed at the wholesale level. Costs at the manufacturing level typically double by the time they reach the consumer, they said.
The budget plan would double the current 16-cent federal excise tax on a six-pack of beer.
Tax on a 750-milliliter bottle of wine would rise to 25 cents from three cents; on a gallon of wine, the tax would jump to $1.27 from 17 cents. (Champagne, now taxed at $3.40 a gallon, is exempted from the proposed increase.)
The federal tax on distilled spirits would increase to $14 a “proof gallon,” which is 50% alcohol by volume. That translates into a $2.23 federal tax on a 750-milliliter bottle, up 24 cents.
One longtime California winemaker called the proposed tax “very, very unfair” because cheap and expensive products are taxed the same.
