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.
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 and alcohol retailers 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.
“This can not pass,” wrote H. Geno Acevedo, president and brewmaster of the El Toro Brewing Co. in Morgan Hill, in an e-mail. “If it did, there would be no American craft beer industry and probably only one or two large industrial breweries might remain for a while.”
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. The text of the initiative cited $38.4 billion in alcohol-related problems in California alone as a major reason for increasing the tax.
“Anything that would increase the price of the product is a good thing,” said Dina Campeau, who sits on the board of the South County Collaborative, a coalition of nonprofits that advocates for access to health and human services.
Higher prices on beer and liquor would reduce access for underage drinkers, she reasoned. For years, South County Collaborative has been pushing for an increased tax and working to raise awareness about underage drinking and “alcopops” – sweetened alcoholic drinks marketed toward young drinkers. As for a tax on wine, Campeau said she didn’t have a strong opinion because wine isn’t typically something teens abuse to the same extent as beer and liquor.
“I don’t think (the tax) is exorbitant,” she said, adding that large alcohol companies have been “getting away with not paying their fair share of taxes for decades.”
As a result, taxpayers swallow the costs of alcohol-related health issues and the harm that is caused when alcohol companies market their product to underage drinkers, she said.
Sun Valley Market in Morgan Hill off Monterey Road sells a bevy of alcohol choices, but its owner of 20 years George Seoud isn’t worried about the tax, “there’s no way” it will even reach a ballot, he said.
“Inflation is one thing, but that’s straight up robbery,” he said. Seoud thinks that lawmakers like to start the conversation at the highest number possible, then if it does pass at usually a much smaller number, store owners are led to think, “oh, it’s not that bad.”
Manager Reney “Frenchy” Prieur of Trader Joes on East Dunne Avenue had a good laugh when told about the tax.
“That would destroy the industry so bad. In this economy? We’re supposed to be hiring more people,” Prieur said. “I’m going to back to France if that happens. Wine is cheaper there.”
He said most customers purchase an $8 or $9 bottle of wine, but with the tax, he said they would lose every customer, “you’ve done something that people can’t reach.” And what about Two Buck Chuck to Seven Buck Chuck? “That would be the end of all that,” he said pointing toward the 5-foot tall castle of wine bottles and cases. “It’s not a solution, just an idea that needs a lot more thought.”
Vintners said they understood a small tax – perhaps 10 cents per case – but the numbers proposed in the initiative baffled them.
“The wineries are taxed to the hilt already,” said Gino Fortino, owner of Fortino Winery.
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 additional dollar per drink at a bar, according to an analysis provided by the state’s Legislative Analyst’s Office.
Gerry and Louise Page shopped for groceries Thursday afternoon at Trader Joes, stopping at the imported beer display.
“I love beer,” Gerry said. “But this sounds like a California thing,” he said about the proposed tax. The Page’s travel full-time in an RV but call Klamath Falls, Ore. their hometown. They said they wouldn’t shell out $12 for a six-pack of beer. “I’d have to start drinking orange juice,” Gerry said.
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 the price of 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.
“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.”
Staff writer Lindsay Bryant contributed to this story.
