Industry gears up to fight Schwarzenegger wine tax
California wineries and supporters of the wine industry are gearing up for their biggest fight in at least a decade: heading off Gov. Arnold Schwarzenegger’s proposed excise tax hike on wine.
Vintners are speaking out to whoever will listen, predicting the most dire economic consequences if the measure passes.
“It’s like shooting Charles Shaw in the eye,” says Fred Franzia, of his Two Buck Chuck. Franzia worries that the wine’s price could soar by 25 or even 50 cents per bottle.
The tax hike “is insanity,” says Joseph Filippi, of Cucamonga-based Joseph Filippi Winery and Vineyard. His near neighbor, Don Galleano, of Galleano Winery, in Mira Loma, predicts the new law “is going to be detrimental to business” if it passes.
Winery owners, small and large, see doom if they’re forced to raise bottle prices. Greg Popovich, president of Castle Rock Winery, in Sonoma County, says he’s been warned by Beverages, and More!, one of his leading retail accounts, “that if I raise my price by even a penny in this economy I will lose the account.”
The CBS local affiliate in San Luis Obispo quoted Gary Eberle, of Paso Robles’ Eberle Winery, as saying the tax rise “by itself probably could put a few people out of business. There are just so many things aggravating our business right now, I’ve seen a lot of people in serious trouble.”
Robert Koch, president and CEO of The Wine Institute, wrote Schwarzenegger, arguing, “[W]e strenuously object to the singling out of our industry to bear more than our fair share of the burden.” The Governor’s proposal would raise the state’s wine excise tax by 640 percent, sending it from 20 cents a gallon to $1.48 a gallon, and causing the loss of at least 6,756 wine jobs, Koch calculates.
The Wine Institute released this chart representing the effect of the proposed surtax on wine.
The industry is asking consumers to write the Governor opposing the measure. Care2, an online “healthy and green living” website, has launched a petition drive.
The last time California was confronted with the threat of a big sales tax hike, Wine Institute’s then head, John DeLuca, successfully fended it off. It will be interesting to see if Koch can do the same. With California hemorhaging money, Democrats in charge of the State Legislature, and a nominally-GOP Governor who’s been acting more like a Democrat the last few years than a Republican, I’m predicting taxes are going up on wine, regardless of whether anyone likes it or not. When push comes to shove, elected officials will protect the interests of cops, firefighters, prisons and schools over those of wine drinkers. And the truth is, people who buy Two Buck Chuck can shell out another 50 cents.