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July 17, 2008

The only thing cheap in France: wine

Here in Paris, Coca-Cola is five dollars a glass. A grilled cheese sandwich is ten dollars. And gas is ten dollars a gallon. But France still offers one good deal to Americans -- and the French and everybody else. A decent bottle of wine can be had for two or three euros -- three or six dollars. A great bottle can be had for ten or fifteen dollars. (I'm violating Sun style by spelling out monetary amouts, but my French keyboard doesn't have a dollar sign! At least not that I can find. It also has the letters 'w' and 'm' and 'a' and a bunch of other stuff in the 'wrong' places.)

The reasons, of course, are subsidies and taxes and the fact that wine is France's holiest agriculture product. Government subsidies keep wine cheap in the production process. And when it gets to the store wine carries virtually no tax. French wine purchased in France carries no European tax. And the French national levy is only around three cents per bottle. Of course this is in great contrast to the situation in Maryland, the U.S. and many other nations, where alcohol is taxed at penalty rates accompanied by lectures on temperance.

Not everybody is happy about bargain French wine. Scandanavian nations, especially, tax alcohol at high rates and want wine-producing nations such as France and Italy to catch up. Every few years some French policymaker will propose increasing the wine tax by a few pennies to underwrite the country's expensive health system or some other worthy cause. But then the wine industry -- and, indeed, France itself -- goes nuts.

'It’s a scandal,' Jean-François Délorme, president of the Burgundy Wine Interprofessional Bureau, was quoted as saying a few years ago, when politicians had proposed a modest increase. 'They are trying to assassinate wine at a time that consumption is already falling in France.'

France is very unhappy with the high fuel taxes here, which make gas so expensive. But better that than higher wine taxes.

Posted by Jay Hancock at 11:20 AM | | Comments (2)
        

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Wednesdays and Fridays.
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