Governor proposes increased excise tax on wine

Governor Arnold Schwarzenegger makes a controversial proposal to help close the state's $41.6 billion budget gap.

The governor wants to raise the state's excise tax on wine. Right now, we pay just 4 cents per 750 milliliter bottle. But if the governor has it his way, the cost could jump to nearly 30 cents for that same size bottle. That is a 640 percent increase.

The battle to balance California's $41 billion budget deficit finds itself in wine country. The vineyards in San Luis Obispo County are hundreds of miles away from legislators in Sacramento, but the two are at the center of attention because the governor has proposed an excise tax on wine.

The idea has people in the wine industry outraged. Stacie Jacob is with the Paso Robles Wine Country Alliance. She said, "To target a specific industry, especially an industry that's growing and thriving, one of the leading industries - and to target an agricultural industry I think is just not the approach to go."

Jacob adds that the wine industry in San Luis Obispo County alone contributes $1.8 billion into the economy and employees 8,000 people.

Jacob goes on to say that a tax like the one the governor is proposing could be devastating to the wine industry on the Central Coast.

"It really is one of the largest thriving industries in our area, and to have a tax like this is really one of those threats that could be detrimental to the industry," says Jacob.

Jacob and others in the wine industry admit something needs to be done to help resolve the state's money crisis, but they say the governor's latest proposal is not the answer.

Winemaker Don Brady said, "It's not positive for our industry. It's not positive for the area and it will negatively affect all of us."

Several organizations within the wine industry plan on lobbying against the governor's proposal.