Couple floats proposal for $5 tax on wine, beer

Say goodbye to "Two Buck Chuck" and dollar-beer nights - it'll be "Seven Buck Chuck" and two-dollar drinks if a proposed alcohol tax is passed by voters this November. Slapping a five dollar tax onto every bottle of wine will do more than just ruin a brand's nickname and dampen drink deals at local pubs - it'll destroy the California wine industry, local vintners said.

If passed, the Alcohol-Related Harm and Damage Services Act of 2010 would increase the excise tax on a bottle of wine by 12,675 percent, from the current 4 cents a bottle to $5.11.

"I've never seen anything like this," said Cheryl Murphy Durzy, vice president of sales and marketing at Clos LaChance Winery in San Martin. "It would put me out of business."

The proposal would also impose additional taxes on beer and spirits, tacking nearly an additional $6 onto a six-pack of beer and an additional $17 onto a 750-milliliter bottle of distilled spirits.

The initiative's backers - listed as Josephine and Kent M. Whitney - need 434,000 signatures by Aug. 23 to put the measure on the ballot, according to the California Secretary of State's Web site. According to the proposal, revenue generated by the tax would finance programs that address alcohol-related harms.

Building a business in an industry that is already heavily taxed at a time when the economy couldn't get much worse hasn't been easy, said Jason Goelz, winemaker at Jason-Stephens Winery.

"Last year I made zero dollars but paid about $70,000 in permit fees, licensing fees, excise taxes," Goelz said. "This is why businesses are leaving California. Wine grows amazingly well in California and especially in Santa Clara County, so I can't just pick up my business and leave. I also can't charge my customers more and expect to keep them."

Wine growers, breweries and bars would be forced to pass the tax onto their customers, local vintners said. That means about an extra dollar per drink at a bar, according to an analysis provided by the state's Legislative Analyst's Office.

Solis Winery Co-owner Vic Vanni said it's "unreal" how much he and his fellow wine growers pay in taxes and fees. Although he hadn't yet heard about the new initiative, "nothing surprises me," he said.

The proposed tax would as much as double his cost on a $60 case of wine, said George Guglielmo, winemaker and president of Guglielmo Winery in Morgan Hill.

"It's ridiculous," said Guglielmo, whose grandfather started the winery in 1925. "So ridiculous that I don't think it's going to go anywhere."

Even though the Legislative Analyst's Office projected the tax would produce annual additional revenues from $7 to $9 billion, the new tax would likely cause a reduction in consumption. Decreased consumption means less money for the state, fewer jobs and more wineries going out of business, vintners said.

"The wineries are taxed to the hilt already," said Gino Fortino, owner of Fortino Winery.

Although vintners said they understood a small tax - perhaps 10 cents per case - the numbers proposed in the initiative baffled them.

"I understand the need to raise taxes," Murphy Durzy said. "The state is in a crisis - I totally get it. But let's be reasonable. If this passed, it would destroy the California wine industry."

Tax, now and proposed

Six-pack of beer - Now: 11 cents - Proposed: $6.08

750 ml bottle of wine - Now: 4 cents - Proposed: $5.11

750 ml bottle of distilled spirits - Now: 65 cents - Proposed: $17.57

Source: California Secretary of State Web site