Budget bill: Wine tax up 58 percent

Canandaigua, N.Y. — The excise tax on beer and wine will go up, and New Yorkers will soon be paying a deposit for bottled water if Gov. David Paterson’s budget is passed as is. As for the so-called obesity tax on non-diet soda the governor proposed in December, that was scrapped.

State Sen. Michael Nozzolio, R-Fayette, called the budget as a whole — which he claims will cost the average upstate family $4,000 in increased taxes and fees — a “disaster.”

As for the increase in the wine excise tax, in particular, “it will cost jobs,” Nozzolio said. “Wineries will sell less product. Fewer people will be working in the wineries. Fewer people will be growing grapes as a result of this tax.”

Paterson had initially called for an increase from 19 to 54 cents per gallon in the wine excise tax, and from 11 to 21 cents per gallon in the beer tax. In the final budget, which was announced over the weekend, the wine tax will increase to 30 cents per gallon, and the tax on beer will go up to 14 cents.

The excise tax is paid by the producer. In the case of wine and beer, that means the wineries and the breweries.

“For some of these small guys, it’s going to hit them pretty hard,” said Luke Jensen, general manager at Vineyard’s Discount Wine & Spirits in Canandaigua.

At Vineyard’s, however, that increase will not mean an increase in the price for the consumer, according to Jensen.

“A lot of consumers won’t have to see it for the most part,” he said. “It’s a hit that we’re going to take. It won’t show at the register for them. We’re not going to change our price.”

That likely won’t be the case at all stores. John Brahm, the owner of Arbor Hill Grapery in Bristol Springs, said consumers should most certainly expect to see an increase in the cost of a bottle of wine.

“It’s just plain an extra tax that has to be passed along to the consumer,” he said. “We have to pay it, and then we pass it along.”

Brahm expects that the increased cost will result in a decline in consumption.

In the end, it amounts to a double tax, he said. An increase in the excise tax drives up the cost, which in turn will cause the sales tax to go up, since the bottle of wine itself will cost more.

“The excise tax is based upon the gallon,” said Brahm. “That’s going to increase the bottle at the retail level. Then there’s going to be an extra sales tax because the amount on the bottle is going to be higher.”

Brahm’s comments were based on the initial assumption that the tax would be increased to 54 cents per gallon. It’s now slated to go up to 30 cents. When he was asked if he felt any better knowing the tax increase wouldn’t be as significant, he said he “didn’t feel any different.”

“In fact, I feel even worse,” he said. “The beer increase is even less. It puts wine at even more of a disadvantage.”

The excise tax on wine will go up nearly 58 percent. On beer, it will go up 27 percent.

That disparity between the increases in the two taxes was “one of the big issues,” according to Nozzolio, and one that “we should have had an opportunity to discuss in open conference.”

By his count, there are some 160 wineries in the Finger Lakes region alone.

“I would like to know why the wine industry was singled out,” he said. “That industry is growing jobs in New York state. Why now place this tax? What do you ground it on? What kind of disadvantage will you put on New York wines.”

As for other beverages, it’s not even clear what will happen, though “beverages across the board are expected to increase,” according to Nozzolio. “We’re still trying to find out” what exactly will be increased, he said. The budget that was released over the weekend was hashed out mostly in secret.

Bottled water will cost a little more, too. Consumers will now have to pay a five cent deposit fee for each bottle.

For Nozzolio, that increase is indicative of the overall problem with the budget.

“It will translate to a loss of jobs in our state,” he said. “It will guarantee that the state of New York will remain mired in the recession far longer than any other state in the nation.”