CRS REPORT SAYS WINE LEAST-TAXED ALCOHOLIC BEVERAGE.

                          WINE EXCISE TAXES

In calendar year 1992, there were about 122 large and 1,526 small domestic wine producers. For large wine producers, most statutory wine rates increased under the Revenue Reconciliation Act of 1990 (RRA90). Because of a tax credit provided to small wine producers by the RRA90, the effective tax rate for small producers has remained unchanged since 1951. The typical 750-ml. bottle of table wine has an effective Federal excise tax rate of 3 cents for small wineries and 21 cents for large wineries. If alcohol taxes are compared per drink, wine is found to be the mostly lightly taxed (at the "large winery" rate). Federal excise tax attaches at an approximate rate of 4 cents per glass of wine, 5 cents per can of beer, and 13 cents per mixed drink.

STATUTORY TAX RATES

The statutory tax rates on wines are levied at a variety of rates and expressed in a unit of measure designated as a wine gallon. A wine gallon contains 231 cubic inches of liquid at a temperature of 60 degrees F without regard to alcohol content. While the unit of measure remains the same for all types of wine products, the tax rates imposed on still wines increase with alcohol content. Higher tax rates apply to artificially carbonated and sparkling wines (champagne). Currently, the tax rates set in the Revenue Reconciliation Act of 1990 (RRA90) (Public Law 101-508) provide a statutory rate range from $1.07 per wine gallon on still wine to $3.40 per wine gallon on sparkling wines (champagne). Prior to the RRA90, the tax rates had not changed since 1951 and ranged between 17 cents per wine gallon to $3.40 per wine gallon. Note, the tax rates on sparkling wines (champagne) were the only wine rates not increased under the RRA90. A table of statutory rates both prior to and after enactment of the RRA90 is provided on the following page in table 1.

 TABLE 1. Comparison of Statutory Wine Excise Tax Rates Prior To and

RATE CONVERSION

Wine is most commonly sold in 750-ml. bottles. This bottle size equates to 25.4 ounces. Under the RRA90, Federal excise taxes rose from 3 cents to 21 cents on a 750-ml. bottle of table wine. If a glass of wine holds approximately 5 ounces, the tax rate per glass produced by a large winery equates to slightly more than 4 cents. Because of the 90 cents per wine-gallon tax credit provided to small domestic wineries by the RRA90, the tax rate for small wineries equates to 3 cents per 750-ml. bottle or far less than a penny per glass of wine. Note that a large winery pays more tax on a glass of wine than a small winery pays on an entire bottle. Table 2, which appears on the following page, compares the taxes paid on 750-ml. bottles of wine produced by large wineries both before and after the RRA90.

           TABLE 2. Comparison of Large Winery Excise Taxes

² Small brewers who produce fewer than 2,000,000 barrels of beer per year pay a Federal excise tax rate of $7.00 per barrel for the first 60,000 barrels of tax-paid beer. After 60,000 barrels, small brewers pay $18.00 per barrel. This is equivalent to approximately 2 cents per 12-ounce serving for the first 60,000 tax- paid barrels.