Tax Increase on Wine

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Tax Increase on Wine

Post  Yoni Ovadia on Thu Jan 22, 2009 10:15 pm

The Governator is proposing over a 600% increase on wine bottles. From 4 cents a bottle to 29.6 cents per bottle.

http://www.ajc.com/services/content/printedition/2009/01/22/winetax0122.html

Please ignore the fact that they are referencing 2 buck chuck in the story. This tax increase can get quite expensive considering how many bottles some people buy in a year.
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Re: Tax Increase on Wine

Post  C. Fu on Thu Jan 22, 2009 10:26 pm

Yoni Ovadia wrote:The Governator is proposing over a 600% increase on wine bottles. From 4 cents a bottle to 29.6 cents per bottle.

http://www.ajc.com/services/content/printedition/2009/01/22/winetax0122.html

Please ignore the fact that they are referencing 2 buck chuck in the story. This tax increase can get quite expensive considering how many bottles some people buy in a year.

using 600% makes it sound like it's a crazy ass tax. 29 cents is not that much. Given how much most wineries up their price yearly we may never even feel this?
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Re: Tax Increase on Wine

Post  Yoni Ovadia on Thu Jan 22, 2009 10:31 pm

C. Fu wrote:
Yoni Ovadia wrote:The Governator is proposing over a 600% increase on wine bottles. From 4 cents a bottle to 29.6 cents per bottle.

http://www.ajc.com/services/content/printedition/2009/01/22/winetax0122.html

Please ignore the fact that they are referencing 2 buck chuck in the story. This tax increase can get quite expensive considering how many bottles some people buy in a year.

using 600% makes it sound like it's a crazy ass tax. 29 cents is not that much. Given how much most wineries up their price yearly we may never even feel this?

A lot of people may not feel this, but you figure for the ones that buy hundred's of bottles a year or more may feel it a bit. Sure, it's not a whole lot, but seems like a backward way to fix our budget crisis.
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Re: Tax Increase on Wine

Post  Michael Bowden on Thu Jan 22, 2009 10:59 pm

Yoni Ovadia wrote:The Governator is proposing over a 600% increase on wine bottles. From 4 cents a bottle to 29.6 cents per bottle.

http://www.ajc.com/services/content/printedition/2009/01/22/winetax0122.html

Please ignore the fact that they are referencing 2 buck chuck in the story. This tax increase can get quite expensive considering how many bottles some people buy in a year.

Gotta love the AJC reference to a California issue.....weve got enough issues here in ATL...I mean, how about some Sunday sales?
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Re: Tax Increase on Wine

Post  Peter Cargasacchi on Fri Jan 23, 2009 12:02 am

An issue is that it has a disproportional impact on the larger production, lower margin wines. For those bottlings the tax probably exceeds the profit margin? Plus its only on 750 ml format bottles right?
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Re: Tax Increase on Wine

Post  Glenn Levine on Sat Jan 24, 2009 3:37 pm

this beats the snot out of trying to overturn Prop 13 IMO.
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Re: Tax Increase on Wine

Post  John Tomasso on Sun Jan 25, 2009 2:03 pm

Glenn Levine wrote:this beats the snot out of trying to overturn Prop 13 IMO.

Don't worry, that's coming.
It's consumer unfriendly, and they shouldn't do it. Especially not now, in a recession.
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Re: Tax Increase on Wine

Post  Glenn Levine on Sun Jan 25, 2009 4:23 pm

i don't think this tax increase, even with Freddie saying Charles Shaw would be forced to go to $2.49/btl, causes consumers to buy less wine. the state needs to increase revenues dramatically and can't raise property taxes, and can only marginally raise income taxes. money has to come from somewhere.
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Re: Tax Increase on Wine

Post  John Tomasso on Sun Jan 25, 2009 4:47 pm

unless they try something novel, like cutting spending
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Re: Tax Increase on Wine

Post  Glenn Levine on Sun Jan 25, 2009 7:13 pm

now that would be revolutionary indeed!
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Re: Tax Increase on Wine

Post  Todd F r e n c h on Sun Jan 25, 2009 7:41 pm

John Tomasso wrote:
Glenn Levine wrote:this beats the snot out of trying to overturn Prop 13 IMO.

Don't worry, that's coming.
It's consumer unfriendly, and they shouldn't do it. Especially not now, in a recession.
If it was done, the mass exodus out of California would be epic. They know this, and that's why I don't think it will be done. As long as property values here are so much higher than nearly everywhere else in the nation, it won't be overturned. If there is some massive correction, and the affordability factor comes into play, then maybe

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Re: Tax Increase on Wine

Post  Todd F r e n c h on Sun Jan 25, 2009 7:42 pm

John Tomasso wrote:unless they try something novel, like cutting spending
Yeah, interesting how the Governator hired two or three new people, each over 100k/year, for newly created commissions, that will also get support staff. Essentially he added $1million to the budget, minimum

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Re: Tax Increase on Wine

Post  Brian Loring on Mon Jan 26, 2009 1:52 am

C. Fu wrote:...29 cents is not that much. Given how much most wineries up their price yearly we may never even feel this?
Let's try to put this tax in it's true perspective.

This is an increase in EXCISE TAX. Wineries have to pay this tax on their wine PRIOR to being able to sell it. For a winery our size, it adds an ADDITIONAL $20,000 that we'll have to pony up before we can sell the wine. That's significant. Since it's not a tax added onto each sale, the only way to pass the tax on will be to raise prices. And given the economic reality, how many wineries do you think will be able to raise prices to cover that? Answer - very few. Certainly not us. We'll have to eat that cost. So the tax isn't being paid by everyone equally - it'll be completely paid for by wineries.

And larger wineries that get hit with a $250,000 bill? Even if they can raise prices, how will they float that cost for the year it takes to get it back? Probably lay people off. No matter what, I can guarantee the tax will prevent a lot of wineries from buying new equipment, which has a ripple effect as well.

I get that the state needs money. But wineries shouldn't be forced to carry an unfair amount of the burden. Why stick a knife in the heart of an industry that not only generates tons of sales tax revenue, but also draws huge amounts of tourist dollars to the state. This is the WRONG way to go about raising revenue.
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Re: Tax Increase on Wine

Post  Glenn Levine on Mon Jan 26, 2009 2:00 am

Brian Loring wrote:
C. Fu wrote:...29 cents is not that much. Given how much most wineries up their price yearly we may never even feel this?
Let's try to put this tax in it's true perspective.

This is an increase in EXCISE TAX. Wineries have to pay this tax on their wine PRIOR to being able to sell it. For a winery our size, it adds an ADDITIONAL $20,000 that we'll have to pony up before we can sell the wine. That's significant. Since it's not a tax added onto each sale, the only way to pass the tax on will be to raise prices. And given the economic reality, how many wineries do you think will be able to raise prices to cover that? Answer - very few. Certainly not us. We'll have to eat that cost. So the tax isn't being paid by everyone equally - it'll be completely paid for by wineries.

And larger wineries that get hit with a $250,000 bill? Even if they can raise prices, how will they float that cost for the year it takes to get it back? Probably lay people off. No matter what, I can guarantee the tax will prevent a lot of wineries from buying new equipment, which has a ripple effect as well.

I get that the state needs money. But wineries shouldn't be forced to carry an unfair amount of the burden. Why stick a knife in the heart of an industry that not only generates tons of sales tax revenue, but also draws huge amounts of tourist dollars to the state. This is the WRONG way to go about raising revenue.

an excise tax is particularly onerous on wineries. tax should be a consumption tax @ time of retail sale!
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Re: Tax Increase on Wine

Post  Rich K0rzenk0 on Mon Jan 26, 2009 2:15 am

Glenn Levine wrote:
Brian Loring wrote:
C. Fu wrote:...29 cents is not that much. Given how much most wineries up their price yearly we may never even feel this?
Let's try to put this tax in it's true perspective.

This is an increase in EXCISE TAX. Wineries have to pay this tax on their wine PRIOR to being able to sell it. For a winery our size, it adds an ADDITIONAL $20,000 that we'll have to pony up before we can sell the wine. That's significant. Since it's not a tax added onto each sale, the only way to pass the tax on will be to raise prices. And given the economic reality, how many wineries do you think will be able to raise prices to cover that? Answer - very few. Certainly not us. We'll have to eat that cost. So the tax isn't being paid by everyone equally - it'll be completely paid for by wineries.

And larger wineries that get hit with a $250,000 bill? Even if they can raise prices, how will they float that cost for the year it takes to get it back? Probably lay people off. No matter what, I can guarantee the tax will prevent a lot of wineries from buying new equipment, which has a ripple effect as well.

I get that the state needs money. But wineries shouldn't be forced to carry an unfair amount of the burden. Why stick a knife in the heart of an industry that not only generates tons of sales tax revenue, but also draws huge amounts of tourist dollars to the state. This is the WRONG way to go about raising revenue.

an excise tax is particularly onerous on wineries. tax should be a consumption tax @ time of retail sale!

I think given the current economic state any tax increase is just a bad idea for the ripple affects alone. The states just trying to sidestep their biggest obstacle to taxing the consumer, the Internet, being that they can't capture every sale. Unfortunately, they have to pin it on someone they can collect from and its the wineries. They probably assume the wineries will pass it on, thus becoming a virtual tax on all consumers however for the reasons that Brian has noted, its ridiculous for the state to assume that it will be passed on and it will have dire consequences. They need to support businesses right now, not impede them especially with the current state of the credit markets.
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Re: Tax Increase on Wine

Post  Brandon Miller on Mon Jan 26, 2009 3:24 am

Howabout being a little transparent and raise prices by half the cost of the tax. Share in the liability and let your customers know exactly what's going on?
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Re: Tax Increase on Wine

Post  Yoni Ovadia on Mon Jan 26, 2009 4:09 am

Rich K0rzenk0 wrote:
Glenn Levine wrote:
Brian Loring wrote:
C. Fu wrote:...29 cents is not that much. Given how much most wineries up their price yearly we may never even feel this?
Let's try to put this tax in it's true perspective.

This is an increase in EXCISE TAX. Wineries have to pay this tax on their wine PRIOR to being able to sell it. For a winery our size, it adds an ADDITIONAL $20,000 that we'll have to pony up before we can sell the wine. That's significant. Since it's not a tax added onto each sale, the only way to pass the tax on will be to raise prices. And given the economic reality, how many wineries do you think will be able to raise prices to cover that? Answer - very few. Certainly not us. We'll have to eat that cost. So the tax isn't being paid by everyone equally - it'll be completely paid for by wineries.

And larger wineries that get hit with a $250,000 bill? Even if they can raise prices, how will they float that cost for the year it takes to get it back? Probably lay people off. No matter what, I can guarantee the tax will prevent a lot of wineries from buying new equipment, which has a ripple effect as well.

I get that the state needs money. But wineries shouldn't be forced to carry an unfair amount of the burden. Why stick a knife in the heart of an industry that not only generates tons of sales tax revenue, but also draws huge amounts of tourist dollars to the state. This is the WRONG way to go about raising revenue.

an excise tax is particularly onerous on wineries. tax should be a consumption tax @ time of retail sale!

I think given the current economic state any tax increase is just a bad idea for the ripple affects alone. The states just trying to sidestep their biggest obstacle to taxing the consumer, the Internet, being that they can't capture every sale. Unfortunately, they have to pin it on someone they can collect from and its the wineries. They probably assume the wineries will pass it on, thus becoming a virtual tax on all consumers however for the reasons that Brian has noted, its ridiculous for the state to assume that it will be passed on and it will have dire consequences. They need to support businesses right now, not impede them especially with the current state of the credit markets.

Exactly, and even if some wineries do pass it on, what if a small winery doesn't sell out and has some back bottles left? That's sunk cost and can really hurt a lot of the smaller (and even some bigger) wineries.
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Re: Tax Increase on Wine

Post  Brian Loring on Mon Jan 26, 2009 4:10 pm

Brandon Miller wrote:Howabout being a little transparent and raise prices by half the cost of the tax. Share in the liability and let your customers know exactly what's going on?
But how do you let customers know? I don't think TTB would let you put a discussion of taxes on the label - and all labels need to be approved by them. Not that I'd want to do that anyway. And also consider that nationally, consumers won't necessarily know about the CA tax increase - which would make ONLY CA wines higher. Not Oregon wines. Not Washington state wines. The tax would be collected by CA on wines made here before they're sold anywhere. Yep, not just on wines sold in CA. And we're already paying a tax as it is. I think it's extremely stupid in this economic climate to make it even harder for one of the state's major industries to compete in the national and global markets.

And even if we could pass the cost on in some way, it's still not fair asking us to be the state's line of credit provider. It'd be like asking individuals to pay all their income tax for the year in January - rather than taking deductions from paychecks throughout the year. And then saying that the amount was now 7 times what it used to be. Would anyone think that was fair?
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Re: Tax Increase on Wine

Post  Todd F r e n c h on Mon Jan 26, 2009 4:23 pm

Brian's right - the cost to educate the public on this excise tax would be incredible, and why should they have to do it?

I'm so sick of it - companies across the world are cutting costs, cutting labor, doing what they can to make it, yet our state Government needs money and decides not only to NOT reduce any salaries, but to add more departments for friends of the Governator, and to increase taxes. This tax will really hurt the winemakers who are already pinched big time due to the economy. Not good.

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Re: Tax Increase on Wine

Post  Brandon Miller on Mon Jan 26, 2009 4:44 pm

Man...I wasn't even thinking nationally. Ultimately if you raised prices on wine to cover the tax it means that people across the country are paying for California's budget crisis sometimes without even knowing it. You're right, bad idea. When would this take effect and / or when do they vote on this thing.
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Re: Tax Increase on Wine

Post  Todd F r e n c h on Mon Jan 26, 2009 4:55 pm

Brandon Miller wrote:Man...I wasn't even thinking nationally. Ultimately if you raised prices on wine to cover the tax it means that people across the country are paying for California's budget crisis sometimes without even knowing it. You're right, bad idea. When would this take effect and / or when do they vote on this thing.
Brandon - could be a bad vote. I think it will come down to this as the verbal call for vote:

'First of ahllll, eet's not a tumah!! Second...we eeeether vote theees tax eeen, or weee make you take pay cuts in your sahlariez!'

(All those in favor?)

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Re: Tax Increase on Wine

Post  Brandon Miller on Mon Jan 26, 2009 5:16 pm

Todd F r e n c h wrote:
Brandon Miller wrote:Man...I wasn't even thinking nationally. Ultimately if you raised prices on wine to cover the tax it means that people across the country are paying for California's budget crisis sometimes without even knowing it. You're right, bad idea. When would this take effect and / or when do they vote on this thing.
Brandon - could be a bad vote. I think it will come down to this as the verbal call for vote:

'First of ahllll, eet's not a tumah!! Second...we eeeether vote theees tax eeen, or weee make you take pay cuts in your sahlariez!'

(All those in favor?)

lol!

Seriously though....where do they come up with this stuff? It's like Awnold is sitting in his office with a blind-fold and darts.
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Re: Tax Increase on Wine

Post  Rich K0rzenk0 on Mon Jan 26, 2009 6:17 pm

Brandon Miller wrote:
Todd F r e n c h wrote:
Brandon Miller wrote:Man...I wasn't even thinking nationally. Ultimately if you raised prices on wine to cover the tax it means that people across the country are paying for California's budget crisis sometimes without even knowing it. You're right, bad idea. When would this take effect and / or when do they vote on this thing.
Brandon - could be a bad vote. I think it will come down to this as the verbal call for vote:

'First of ahllll, eet's not a tumah!! Second...we eeeether vote theees tax eeen, or weee make you take pay cuts in your sahlariez!'

(All those in favor?)

lol!

Seriously though....where do they come up with this stuff? It's like Awnold is sitting in his office with a blind-fold and darts.

IMHO, Its probably a lesser of two evils thing. Aside from the earth shattering idea of cutting spending, you have to raise taxes. Now if you do, do you piss off all your tax payers (voters), or do you put the screws to a few through a business tax, hiding the hike to the masses and even getting non-Cali residents to pay for their budget shortcomings to boot. Its pretty fucked up but that's the only way that I can see them making heads and tails out of their fiscal mess and solution.

And, that being said, I'm sure they will take a hit in their fund raising with the route that's on the table. Pols suck.
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Re: Tax Increase on Wine

Post  Brian Loring on Tue Jan 27, 2009 4:05 am

Rich K0rzenk0 wrote:...or do you put the screws to a few through a business tax, hiding the hike to the masses and even getting non-Cali residents to pay for their budget shortcomings to boot.
I think you missed the point that most wineries won't be able to pass the tax along. So it's not a case of "hiding" the tax as much as it's a case of placing an added burden on a lot of small businesses in a time when we really can't afford it.
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Re: Tax Increase on Wine

Post  Rich K0rzenk0 on Tue Jan 27, 2009 4:19 am

Brian Loring wrote:
Rich K0rzenk0 wrote:...or do you put the screws to a few through a business tax, hiding the hike to the masses and even getting non-Cali residents to pay for their budget shortcomings to boot.
I think you missed the point that most wineries won't be able to pass the tax along. So it's not a case of "hiding" the tax as much as it's a case of placing an added burden on a lot of small businesses in a time when we really can't afford it.

It was just a poor choice of words on my part, it would assume you're all passing it on which will definitely not be the case for everyone. I just hope they come to their senses.
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