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Wine Tax Hikes Make News in the USA

Proposed new or increased taxes on wine by various states are making news south of the border, and particularly in California, home of the vast bulk of the U.S. wine industry. The state of California, which is experiencing serious financial problems, is proposing hefty tax hikes on all alcohol including wine. See these stories for details: Sonoma Valley Sun and the Wine Spectator.

In previous years, similar proposed tax hikes have been defeated but the wine industry in California is concerned that the current initiative may sneak through this time due to the deteriorating financial situation of the state government. Not to diminish the seriousness of the situation for California wineries, but if you compare the proposed taxes to B.C.\’s existing taxes on wine, the charges look like small potatoes. The proposed increase in California is from $0.20 a gallon to $1.48 a gallon. While that would no doubt have a serious effect on \”Two Buck Chuck\”, it pales in comparison to B.C. tax rates which often reach $8 to 10 per gallon on a moderately priced bottle of imported wine.

In certain channels, the tax on B.C. wine is a lot less but even there, the minimum tax is 15% plus assorted fees such as the recycling fee which would still exceed the proposed California taxes. Maybe we should consider making our wine industry more competitive by reducing this disproportionate tax burden?

It\’s also interesting to note that the same rationale for higher alcohol taxes that is being used in California is often used here: that being that taxes on wine are \”sin taxes\” and thus they are permissible at a higher rate than normal. That argument doesn\’t wash for me. The vast majority of British Columbians moderate their wine consumption to low to moderate levels. There is, in fact, a great deal of evidence that such low to moderate consumption has overall health benefits not detriments. As a result, it is not appropriate to tax wine consumption as a sin – as in the Mediterranean countries, it should be viewed as a normal part of a healthy lifestyle. Consequently, the taxation rate on wine should be a normal rate, not an oppressively high one, as is currently the case in B.C.

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