Critic says tax hike on wine, spirits hurts state's price advantage

  TRENTON - New Jersey's wine and spirits dealers are hoping a proposed tax increase will not scare the state's neighbors away from buying New Jersey alcohol.
Gov. Jon S. Corzine's proposed budget increases the tax rate on wine and spirits by 25 percent. If approved, the hike would mean a per-gallon increase of $1.10 in the price of spirits and 17.5 cents in the price of wine. The increases would still leave prices less than those in most neighboring states.

The governor and the nonpartisan Office of Legislative Services estimate that increasing the tax would raise an extra $22 million for the state.

But Jeffrey Warsh, executive director of the New Jersey Wine and Spirits Wholesalers Association, said keeping the tax at its current level or lowering it might increase revenue, as a result of cross-border sales.

Warsh explained that wholesalers across the country purchase wine and liquor at essentially the same price. Tax rates account for almost the entire difference among prices for alcohol in different states.

被过滤广告 If enacted, New Jersey's tax on wine would equal 88 cents.
New York's tax started at 19 cents per gallon, according to the Tax Foundation, a nonpartisan group that tracks tax burdens. However, New York's proposed budget would increase the wine tax to 51 cents per gallon. Delaware's wine tax adds 97 cents per gallon, while Pennsylvania's was unlisted.

New Jersey has an even stronger advantage in the spirits market. Even after the increase, the state would add $5.50 in taxes to every gallon of liquor, compared with $6.44 in New York, $6.65 in Pennsylvania and $5.46 in Delaware.

"Maybe we should cut taxes, make ourselves more competitive with the surrounding states and that way derive higher gallonage and higher revenue," Warsh said.

Warsh said increasing the tax, and thereby narrowing the state's advantage, would cost the state. He disputed the government's revenue estimate, which says a 25 percent increase in the tax will lead to a 25 percent increase in revenue. He said the tax increase would lead to fewer sales and lower revenue.

He also said the increase would hurt the state's burgeoning wine industry. Although it is growing, he said, "I would still call it a fledgling industry that requires nurturing."

Kevin Celli, events director at Natali Vineyards in Cape May Court House, believes most wine growers will absorb the proposed increase rather than pass it on to customers.

New Jersey wineries such as Natali cannot partake in the border wars anyway, at least not directly.

A state law bars producers from shipping wine outside the state. To reach consumers in other states, winemakers need to work with wholesalers along the border that engage in cross-border sales.

A bill sponsored by state Senate Majority Leader Stephen Sweeney and Assemblyman John Burzichelli, both D-Salem, Cumberland, Gloucester, would make direct shipping legal, but the bill has remained in committee since lawmakers introduced it in May 2008.