California eyes new wine tax

Is this the end of Two Buck Chuck? A proposal to raise the state tax on wine to a level more than six times as high to help close California's budget deficit would kill the $1.99 US price for Charles Shaw Wine, said Fred Franzia, who created the famous label sold by the Trader Joe's grocery chain.

Charles Shaw is the formal name for the California wines sold since 2002 that are now legendary for the Two Buck Chuck nickname. The proposal by Gov. Arnold Schwarzenegger would raise the tax on wine from four cents for a 750 millilitre bottle to 29.6 cents.

The governor wants to raise alcohol excise taxes by five cents a drink beginning Feb. 1. The revenue would be used to fund substance abuse and prevention treatment programs. The state defines a drink as 1.5 ounces (44 millilitres) of distilled spirits, 12 ounces (355 ml) of beer or five ounces (148 ml) of wine.

Although increases are proposed for all forms of alcohol, California's wine industry feels the most threatened. The levy is charged for wine made and consumed in California and wine shipped into the state. It doesn't affect wine produced in California and shipped to other states or abroad.