Wine and Cider Taxes. Wine is taxed when it is sold to distributors, retailers, or consumers. The total excise tax rate on wine or cider consists of the base tax rate and additional taxes required by statute. The total tax rate for table wines is $0.2292 per liter. The total tax rate for cider is $0.0814 per liter.
Revenue collected from base taxes are deposited in the Liquor Revolving Fund. The Liquor and Cannabis Board is authorized to allocate a specified amount of base tax revenue to Washington State University for wine and grape research.
Most of the revenue collected from the additional taxes are deposited into the state General Fund. The Washington Wine Commission receives revenue collected from the two following additional taxes on wine and cider:
Tax Preference. A tax preference includes an exemption or preferential rate for a tax. Legislation that proposes a new tax preference must include a performance statement that specifies the public policy objectives of the tax preference and the metrics that will be used to evaluate the tax preference. An automatic ten-year expiration date is applied to new tax preferences if an alternate expiration date is not provided.
Definitions. Cider means table wine that contains no less than 0.5 percent of alcohol by volume (ABV) and not more than 8.5 percent of ABV and is made from normal alcoholic fermentation of the juice of sound, ripe apples or pears, and includes flavored, sparkling, or carbonated cider.
Table wine refers to wine containing no more than 14 percent of ABV when bottled or packaged by the manufacturer.
Wine and Cider Taxes. A winery that sells less than a combined total of 20,000 gallons of table wine and cider in a calendar year is subject to a reduced tax rate of $0.0528 per liter of table wine and cider. A winery that qualifies for this tax rate is not subject to most other excise taxes on wine and cider, except for the additional taxes for which revenues are distributed to the Washington Wine Commission.
The revenues from the reduced tax rate on table wine and cider must be deposited in the Liquor Revolving Fund and are subject to allocation to Washington State University.
Tax Preference. A tax preference performance statement is included that states the Legislature's intent to promote the development of small wineries and the jobs they provide, and to extend this tax preference if a review finds the preference accomplishes its specified goals.
The committee recommended a different version of the bill than what was heard. PRO: The tax rate for wine in Washington is disproportionally high compared to other states, which puts wineries in the state at a competitive disadvantage. Many small wineries in Washington are closing and this trend has persisted for years. Small wineries need relief. Similar tax exemptions apply to liquor and beer.
OTHER: The bill should be amended to support the entire wine industry in Washington. Many family wineries would not have access to this change in tax policy as written. It is unclear how this bill would be applied to out-of-state wineries. The bill should be amended to apply the tax exemption to the first 20,000 gallons of wine or cider for all wineries.
PRO: Senator Judy Warnick, Prime Sponsor; PAUL BEVERIDGE, Wilridge Vineyard, Winery & Distillery.