Washington state bill would give small wineries tax break

A proposed tax break for small

wineries is working its way through the Washington Legislature. 

The bill by Sen. Judy Warnick, R-Moses

Lake, addresses wineries producing 50,000 gallons or less a year — exempting

them from paying the state wine tax on their first 20,000 gallons. 

“I’m for the little guy,” Warnick

said.

Owners of small wineries had

approached Warnick to push for a tax break. She tried to get a tax break

through in the past, but changed it this session to cover the first 20,000

gallons, which Warnick believes will convince enough Democrats to vote for it.

Democrats had troubles with this break

taking money from the coffers of the State Liquor & Cannabis Control Board.

“Overall, wineries have a pretty high

tax burden,” said Josh McDonald, executive director of the Washington Wine

Institute.   

In Feb. 12 testimony before the Senate

Labor & Commerce Committee, Senate Bill 5406 supporters contended that 300

to 350 of Washington’s 971 wineries did not make any wine in 2018, with many

having to choose between paying the wine tax or buying grapes. They also noted

that taxes have already been lowered for craft distilleries,

microbreweries and cider producers.

McDonald did not know how many of the

300-plus non-producing wineries in 2018 decided to make wine due to taxes.

However, Wade Wolfe of Thurston Wolfe

Winery in Prosser thinks the legislation “is very divisive for the

industry with who pays taxes and who doesn’t pay taxes.” He prefers to see the

proposed tax break go to all wineries — regardless of size. 

Wolf does not see the state excise tax

as a major burden when considering that wineries also pay a federal excise tax

on their preparation, a state business-and-occupation tax on their gross

receipts, a federal income tax on their businesses and any additional state

taxes when they sell their wine outside of Washington. Wolfe Thurston pays

about $4,000 a year in state excise taxes. 

The federal excise tax system provides

tax breaks up to the first 750,000 gallons of production. 

Washington’s wine tax rates are

$0.2292 per liter for table wines, $0.4536 per liter for fortified wines and

$.0814 per liter for cider. 

If this tax break is approved, the

Washington Liquor & Cannabis Control Board would lose $4.2 million in

fiscal 2019-21, according to state figures. 

In other wine-related legislation:

• Washington House Bill 1563 by Rep.

Bill Jenkin, R-Prosser, passed 89-6, allowing students younger than 21 to taste

wine if they are enrolled in wine-related course in post-secondary education.

The course or field trip must have a special permit from the state Liquor &

Cannabis Control Board. The bill is now going through the Senate.

Testimony before the House Commerce

& Gaming Committee contended students enrolled in wine-related courses tend

to be young and this will help them get hands-on experience in

wine-making. 

• The House also unanimously passed House

Bill 1672 by Rep. Mike Steele, R-Chelan, that would allow someone at a winery

or tasting room to drink some wine out of a bottle, have it recorked or

recapped and take it away from the premises. That bill is now going through the

Senate.

Testimony before the House commerce

committee says this will help prevent people in wineries and tasting rooms from

guzzling the remaining wine in a bottle before they leave.