California winemakers and Washington lawmakers are facing off this week over a proposed hike in alcohol tax.
Congress hopes to fund the forthcoming health care reforms by increasing the so-called “sin taxes,” including taxes from the sale of alcohol and cigarettes.
Proponents on both sides of the issue argue that increased taxes will lead to less alcohol consumption. The group of winemakers hope that they might be exempt.
“They are worried about being taxed in a major way as part of a health care bill,” Democratic Sen. Barbara Boxer said Wednesday, adding “I don’t think we ought to raise taxes on wine.”
The current federal tax on wine is roughly 21 cents per bottle, a rate was set in 1991. Congress argues that a raise in that amount is overdue for inflation.
“The tax rate on alcohol is well below the level that would account for the damage that drinking does to society, in particular through drunk driving,” MIT economist Jon Gruber said in a Senate Finance Committee testimony.
The wine contingency, which included executives from E&J Gallo Winery, Bronco Wine Co. and J. Lohr Winery, among others, told Congress that any increase would affect not only their own bottom lines, but the bottom line of the state of California.
It’s an argument supported by the 250-member Congressional Wine Caucus, co-chaired by Rep. George Radanovich, R-Mariposa.
“It harms the industry,” Radanovich said, “and it increases the price for the consumer.”
The winemakers are also in Washington to resist cuts to a farming subsidy.