Winery Seeking Tax Cut Gallo Wants Its Hard Cider To Be Taxed As Beer Not Wine

California’s giant E&J Gallo Winery would get a 30-cent-a-gallon tax break on its hard cider under legislation being pushed by Orofino Rep. Chuck Cuddy.

The bill would classify Gallo’s new hard apple cider as beer, rather than wine, even though its alcohol content puts it in the wine category.

Wine is taxed at 45 cents per gallon. The tax on beer is 15 cents a gallon.

Cuddy told a Senate committee the measure is needed to allow the sale of the new product in Idaho.

But a Gallo lobbyist later admitted under committee questioning that the cider can be sold now, it just falls under the higher tax.

Asked later about his statement, Cuddy said the cider wouldn’t be competitive without the tax break.

Cuddy, a three-term Democrat, said he agreed to sponsor the bill at the lobbyist’s request, with the idea that it “might sell a few apples.”

Opponents of the legislation said Gallo doesn’t use any Idaho apples.

The bill is vigorously opposed by Idaho’s microbrew industry, which complains that 20 percent of the beer they brew is taxed as wine, because its alcohol content exceeds 4 percent. Large beer manufacturers also oppose the bill as unfair.

“We’d like to have that same 30-cent break for the beer that’s listed in the same category,” Bob Corbell, representing half a dozen Idaho brewpubs, told the committee.

Beer is an Idaho industry. “One third of all the barley we purchase comes out of southern Idaho,” said George Weisbeck of Coors Beer. “Last year that amounted to $11 million.”

“Now we have an out-of-state company coming in, making a product that doesn’t use any Idaho products at this time, asking for a reduced tax rate,” complained Michael Fitzgerald, owner of Table Rock Brewing, which has brewpubs in Boise and Meridian.

Gallo lobbyist Roger Seiber said, “An Idaho apple or a Washington apple or a California apple … in my mind isn’t the question. It boosts the entire market for apples.”

“We were trying to identify and define a unique product that’s very similar to beer, more similar than it is to wine or other distilled spirits,” Seiber told the committee.

Sen. Sheila Sorensen, R-Boise, moved to send the bill to the full Senate for amendments, with the idea of giving all products with up to 6 percent alcohol the same break.

“It doesn’t make any sense to tax one on the basis of their alcohol content, and another one differently,” Sorensen said. “I understand the need for this and why they’d like to have it. I’m not trying to kill the bill.”

Corbell also proposed an amendment to change “apples” to “fruit,” so an Idaho company that brews pear cider would be included.

The committee voted 5-3 in favor of amending the bill. The measure earlier passed the House on a 49-16 vote.

Sen. Mary Lou Reed, D-Coeur d’Alene, voted against the motion, saying the bill should go as-is. Although cider is defined as wine under federal law, it’s only about one percentage point away from beer under Idaho’s alcohol-content law.

“If you hadn’t had the beer issue, this could’ve gone through very easily,” Reed said.

Cuddy said he thought the move to amend the bill would kill it, because the state would lose an estimated $60,000 in annual revenue if it expanded the tax break. He estimated his bill would bring the state an extra $10,000 to $12,000 a year, because so much cider would be sold and taxed, although opponents disputed that.

, DataTimes