As part of the state's effort to close its budget gap this year, New Jersey increased taxes on liquor and wine by 25 percent on Aug. 1, bringing the tax on liquor up to $5.50 per gallon of liquor and 87 1/2 cents per gallon of wine. (Taxation on beer didn't change.) South Orange's liquor stores and restaurants differ on whether to pass the tax on to the consumer.

"I have to raise my prices, definitely," said Sanjay Chawla, owner of A&D Deli & Liquors on Valley Street, who noted that he'll raise prices by the amount of the tax, which could be between 15 and 50 cents for a bottle of wine, depending on its price.

As of last week, Chawla had already made adjustments, to his customers' chagrin. "A customer comes in, bugs me for two or three days, but what can I do?" he said.

Town Hall Delicatessen owner Tony Wonski observed that there's been undue hysteria over the tax, since some people have come away from reading news stories with the belief that the overall price of liquor and wine would go up 25 percent, as opposed to just the tax, which amounts to about a 50-cent increase per bottle. He doesn't anticipate raising his prices. "Fifty cents, I could probably absorb," he said.

While liquor store operators are mostly directly impacted by the tax, restaurant owners are also contemplating how to adjust.

Yannick Ranieri of Papillon 25 says that the tax will certainly affect her bottom line of profitability, but she doesn't intend to adjust her prices. "With the economy like it is, you cannot really raise the prices on your drinks," she said, noting that she'll likely cut back on the amount of top-shelf liquor she buys, since customers have been ordering less of it recently anyway.

Bunny's owner Leslie Pogany says the reality is she'll probably have to raise prices on wine and liquor once the new bills come in. "You just can't keep eating it," she said. "It's getting tougher and tougher to be a small business person."