The Trump Administration finalized a regulation Monday that limits the ability of U.S. wineries and global alcohol companies to reduce their import taxes, a move which the government says is to prevent the companies from double-dipping on tax breaks, The Wall Street Journal reports.
According to the government, companies are choosing imports over domestic production in order to receive a tax advantage.
An unusual move for the corporate-friendly administration, it could potentially add more than $600 million to the government’s coffers over the next decade from the wine industry alone. It’s also expected to prevent billions in refund claims from spirits companies.
Currently under U.S law, companies can have their import taxes refunded if they have a matching or similar exported product. The concern is that for alcohol the United States currently imposes excise taxes on domestic products, but removes taxes from exports regardless of whether or not the company imports alcohol as well.
Worth noting, the U.S. Constitution forbids taxes on exports.
A company might never pay an excise tax on a bottle of whiskey because it was produced for export, but if the same company imports bottles it will ask for refunds for the import taxes. Most distilleries, for instance, are owned by parent companies that own distilleries both in the United States and abroad.
Donald Trump was once in the liquor business himself. In 2006 his launched Trump vodka, a “super premium” vodka that he promised would be “a major player in the vodka arena.” It stopped production after five years. Trump still owns a winery in Virginia.
