Coping With the Prospect of Higher Taxes : Levies on Gasoline, Booze, Luxury Goods Get Mixed Reception From Business

Federal budget proposals to impose new taxes on gasoline, liquor and such luxury items as furs, jewelry and yachts have so far received a mixed reaction from businesses that would be affected.

While some business people vigorously opposed the measures, others thought a healthy economy--if the new budget could bring it--would be more important to their businesses, particularly in the long run.

The tax proposals “may not help you, and they may not hurt you,” said Michel Glouchevitch, a general partner in Los Angeles-based Riordan Venture Management. “They may just create a more stable (economic) environment. . . . We have neglected the budget for so many years now that we’re going to have to hurt for a while, in the short run.”

The proposals, still being negotiated, include a variety of so-called “sin taxes.” These include raising the current 16-cent tax on cigarettes to 20 cents next year, and to 24 cents in 1993. The 16-cent tax on a six-pack of beer would double, and levies on wine and spirits would also go up.

At Trader Joe’s Co., the South Pasadena-based retailer with 37 California outlets, CEO John Shields called the proposed tax on liquor “regressive.”

More than 90% of the wines he sells are priced under $5, Shields said. But the tax would be a uniform tax per unit.

“If I were a wine seller on the West Side, selling $25-a-bottle wines, the tax wouldn’t have as much impact,” Shields said.

The proposed gas tax hike--at least 5 cents a gallon--would come on top of already high oil prices from the Persian Gulf crisis, a particularly onerous prospect to some owners of large delivery fleets.

United Parcel Service Chairman Kent C. Nelson has vigorously lobbied congressional leaders to avoid adding new taxes at a time “when the whole industry is struggling to cope with the steep escalation in fuel prices.”

A 5-cent increase in the gas tax would cost United Parcel an additional $12 million for fuel over the next year, according to a company spokesman. The package delivery company already is paying $900,000 a day more for fuel because of the Kuwait invasion.

On the other hand, Federal Express Corp. is less concerned. Spokesman Armand Schneider said they expected they would be forced to pay $250,000 more for the 5 million gallons of fuel the firm consumes every month.

“We’re a $7-billion company,” Schneider said. “Our financial people think that for a company our size, we don’t consider that a very heavy hit.”

Among luxury merchants, reaction was similarly mixed.

“Obviously, nobody wants taxes,” said Edd Jacobs of Somper Furs Inc. in Beverly Hills. “But I think everyone knows we have problems, and they’re going to cost us whatever they cost. If a $10,000 coat is going to be another $500--I think people will live with that. As long as everybody is doing the same thing.”

Taxes are also proposed on yachts costing $100,000 or more, which in the already depressed economy have not been selling well as it is.

“Our sales are down, and I don’t think (new taxes) are going to help any,” said Finlay G. Scott, owner of Bayside Marine Sales in Newport Beach. “When they put a sales tax on used boats, it had a negative effect,” he said. “People resented it. But they get used to it, and they pay it.”

Still, Finlay noted that advertisements have already begun to appear in yachting publications, urging people to buy now and save the expected 10% tax.

Many jewelers are concerned that customers will wait for the opportunity to buy jewelry overseas, avoiding any new tax imposed here--something not so easily done with a yacht. And other luxury goods manufacturers also warned that the people most directly hurt may be the workers who make such products.

“People forget that poor people make those luxury items,” said Michael Pappas, owner of Los Angeles-based Michael’s Furs, a manufacturer.

“This industry has already been hit by the recession: furs, jewelry, cars, boats, vacations--anything a person could cut back on. This is bad news. This is going to make things even worse.”