In November 2005, the Pennsylvania law that allowed in-state wineries to ship wine to Pennsylvania residents but prohibited out-of-state wineries from doing so was declared unconstitutional. Last June, Governor Rendell proposed legislation that would allow Pennsylvania consumers to have wine shipped directly to their doors from out-of-state wineries (which I blogged about here). As part of Rendell’s proposal, the wineries would be required collect PA’s 18% Emergency Tax (a/k/a/ the “Johnstown Flood Tax”).
Ever wonder what happened to Rendell’s proposal? The PA legislature put it on the back burner. An article in today’s Pittsburgh Post-Gazette explains why:
Because the buyers of Pennsylvania wines make up such a minority of overall wine consumers, and account for such a small percentage of the state’s wine and spirits business, the issue isn't on the front burner in Harrisburg.
Instead, the respective House and Senate committees -- the Liquor Control Committee in the House, and the Law and Justice Committee in the Senate -- are dealing with beer-related issues: whether Sheetz and other convenience stores and supermarkets can sell beer to go, and whether distributors can sell 18-packs.
The PA legislature is clearly a few bottles shy of a case on the direct shipping issue. This proposed law isn’t about Pennsylvania wines or those who buy them. It’s about making sure the state can collect the 18% Johnstown Flood Tax on non-Pennsylvania wine that is purchased through the Internet and shipped into PA. What’s even more bizarre is that the legislature appears to be oblivious to the fact that these Internet wine sales are happening right now. That’s right—currently, there are Internet sites out there that will sell you wine and ship it directly to your door in PA. So, while the legislators wrestle with the heady issue of whether PA’s archaic liquor laws will allow WaWa to sell a six of Bud, the state is hemorrhaging money in lost taxes as its residents take advantage of wine deals on the Internet.
Not having to pay the Johnstown Flood Tax when they order wine over the Internet sounds like great deal for PA consumers. But if getting burned on lost revenue isn’t enough to convince the legislature to move this issue to the “front burner,” perhaps they should no longer be allowed to operate the stove.