Governor Arnold Schwarzenegger has faced angry opposition from Californian winemakers following the announcement that the state tax on wine could rise by up to six times the current rate.
The proposed tax hike –part of a plan to make up the $41.6 billion deficit of the state’s budget- would see the levy on 75cl bottle of wine rise from 4 cents to 29.6 cents.
Winemakers have reacted angrily to the news, with many concerned that the increase would case ‘great injury’ to an industry that already contributes a significant amount to California’s economy.
Local winemaker Don Galleano said that now was ‘no time to tax one of California’s signature industries.’
‘The California wine industry has a $51.8 billion impact on the economy, and this is a time when we have people going out of business because of the poor economy.’
It is estimated that the state’s largest winemaker, E&J Gallo Winery, would see an annual tax increase of $18 million under the new proposals.
A spokesman for the California Department of Finance defended the plans, saying they had been left with little choice.
‘When you have to close a historic $41.6 billion budget gap, you can’t do it by cuts alone. In a perfect world we might not do this.’
Robert Koch, president of the Wine Institute, described the proposals as ‘devastating’, saying that the plans had been worded ‘to disguise a measure that would raise the state’s wine excise tax by 640 percent.’
‘California’s wine excise tax would soar from 20 cents a gallon to $1.48 a gallon.’
‘We understand the dire situation that the state of California is facing, but we strenuously object to the singling out of our industry.’
The tax applies to wine made and consumed in California, as well as wine shipped into the state. It doesn’t currently affect Californian wine shipped out of the state.
Written by John Abbott