Wine Barrels Escape New Calif Tax That Offers Taxpayer Subsidy To Timber Industry

Barrels used for wine, beer and spirits have dodged a bullet and escaped the new 1% timber tax just signed into law by Gov. Jerry Brown.

Paul Kronenberg President of the Family Winemakers of California told Wine Industry Insight:

“Today the Board of Forestry and Fire Protection adopted emergency regulations on what lumber products will be subject to the new 1% timber tax.  Family Winemakers worked closely all last week with the board’s executive director to ensure that wine barrels and wood additives were exempt from the tax.  Today’s regs include the following language for that exemption, “. . .cooperage and treatment materials (including staves, storage vessels, and oak chips for wine, beer and spirits). . .”

“FWC worked with Senator Lois Wolk’s office to send a letter to the BOF urging them to make wine barrels exempt.
The emergency regs, which are effective October 1, 2012, have to be implemented by the Board of Equalization, which will collect the tax from retailers.”

TAXPAYERS TO SUBSIDIZE TIMBER INDUSTRY

According to the Los Angeles Times, the bill, AB 1492, Is effectively a taxpayer subsidy for the California timber industry. Its biggest impact will be to increase the cost of lumber for home construction and improvement. The Los Angeles Times article said that the bill shifts the regulatory costs of overseeing California’s from the industry itself to consumers.

According to the Times:

“The measure also benefits the industry by restricting how much money government agencies can seek when suing for damages in wildfires caused by negligent practices. Federal prosecutors and members of President Obama’s cabinet had fought the bill, which tightens the rules for tallying damages.

“Timber company officials said the new arrangement would prevent the industry from being squeezed by government fees, onerous regulations and overzealous prosecutors. They hope the new 1% tax on lumber sales, which takes effect Jan. 1 and is expected to raise $30 million a year, will lower their costs and make it easier to compete with out-of-state firms.”