California U.S. Representative Mike Thompson has teamed up with fellow representative Dave Reichert from Washington to propose a series of federal tax breaks for the U.S. wine industry. Thompson and Reichert are proposing an overhaul of laws that “brought in $1.07 billion in federal excise taxes from the U.S. wine industry during the last fiscal year,” reports The Press Democrat.
Thompson and Reichert believe changing these laws would help to “spur new and innovative products by modernizing federal excise taxes on wine,” citing the example of sparkling wine, which has been taxed $3.40 per gallon since 1955. This hefty tax goes back to the aftermath of the Prohibition era, when lawmakers wanted to tax French Champagne as an imported luxury item.
Charles Jefferson, vice president of federal relations for the Wine Institute, says “It was basically created as a luxury tax at the time, as most of the sparkling wine was Champagne and tended to be fairly expensive. You can’t say that about today.”
The proposed bill would reduce federal excise taxes on sparkling wine to $1.07 a gallon. “The tax code should not be an impediment to growth and innovation,” Thompson said in a statement. The bill would also increase the maximum allotted carbonation level for still wines to remain taxed at the lower rate from 0.39 grams of carbon dioxide per 100 milliliters to 0.64 grams, encouraging winemakers to experiment with still wines that “have more effervescence.”
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