Comments on Excise Tax Increase

Family Wineries of Washington State is an organization representing 85 small wineries in Washington, as well as numerous affiliate and business members within the wine industry. We are focused on promotion of and advocacy for small wineries. We are writing to express concern over the recent proposal to increase alcohol taxes on wine for the purpose of funding health care reform.

The proposal to raise the tax per proof gallon of alcohol to $3.50 represents, depending on the tax class of wine in question, an increase of more than threefold over the current rate. Worse, since all of our members qualify for the Federal “Small producer tax credit” the actual increase for wine under fourteen percent alcohol by volume would be more than fifteen fold, assuming the small producer credit remains in place. This is an economic hit that small wineries are particularly unable to sustain in the present credit and business climate.

We are further concerned that, given the many studies showing positive rather than negative health benefits deriving from the moderate consumption of wine, the proposal to place wine taxation squarely in the category of alcoholic beverages more subject to abuse, represents bad public policy.

We support the Committee’s goal of attaining health insurance coverage for all Americans, but we believe that such an enormous burden must be shared as broadly and fairly as possible among all taxpayers for this effort to be successful.