The Battle For Booze
Years ago, Beth and I went to Hawaii. We were going for the cheapest trip to Hawaii in the history of man. Airline miles for both of us. Free condo for 10 days. A deal on the rental car. All in all, we pulled the whole trip off for about $700. We didn’t really do much while we were there except sit by the pool at the condo and go to different beaches. We packed our lunches and made dinner each night. We had a “night out” because we went to a timeshare thingee and got tickets to a show in town. It was actually quite impressive how we managed to spend so little.
Since this was the plan, we got off the plane and went straight to Costco. It was there that I experienced for the first time Costco-sized alcohol bottle. Yes, I got one of rum so I could make my own mai tais at the condo. The bottles were big and the price was cheap. It was amazing and something I’d never experienced. Now Costco is trying to bring that to Washington.
The state-run liquor stores are facing extinction with imposing threat of Initiative 1100 and 1105. Currently you can only buy liquor in Washington through the state-run liquor stores, unlike most states where you can buy it in the grocery stores, mini-marts, and well… Costco.
Costco is the major funder behind these initiatives because they stand to make A LOT of money from this. Beer and wine companies are against it because they will now have more competition in the grocery stores and mini-marts which drives down their profit. Many people are for it because their booze will cost them half as much as it does now. “Family”-based organizations are against it because they fear it will be easily available to minors and those with liquor problems, thus increasing alcohol related accidents. The state is against it because it is a large revenue stream for them. People are for it because they don’t think the state should be in the liquor business while at the same time in the alcohol enforcement business.
Bottom Line: Money.
Here are two good articles from the Seattle Times if you’re interested. This is the article FOR the initiatives and here is the article AGAINST. Both provide compelling cases.
I don’t drink as much hard liquor as many people, but I probably end up purchasing 12-15 bottles of hard liquor a year. (This may sound like a lot to you, but when you have as many people over to your house as I do in a year and share it, its not much… don’t worry.)
The average bottle that I buy is probably $17. Multiplied by my 15 bottles = $255/year. Assuming the 51.9% markup the state adds is gone because of 1100/1105, I’d save $122.65 per year.
Lets assume half of the 6,500,000 Washington residents don’t buy liquor. And of the remaining 3,250,000 people, my 15 bottles is the average. That means if the state lost $122 from each of these people not buying liquor, the state loses essentially $398M in revenue. Now part of that covers the overhead of running the existing 300+ liquor stores in the state. But that means the rest of it is money for the state, which is currently $6 Billion in deficit.
The question in my opinion isn’t so much, if the State should be out of the liquor business. To me, the question is revenue. Is now the time to be cutting more state money when we’re trying to build it back up. I’m not sure I know the answer to that yet. Which is why I’m writing this here. I’m processing… not answering.
But I’m not sure me saving $122/year is worth furthering our state deficit, state monopoly or not. Should they have a monopoly, probably not. Should I eat fried chicken? No. But I do. The point is that there are things that may be wrong, but we have to change it when it’s right to change it. And is that time now? Or is Costco feeling the effects of the recession like everyone else and realizing this would help their company more?
Last bit, and then I’ll quit cause this is getting long. On the PRO side… we can realistically expect hard alcohol sales to go up because it’ll be cheaper. This will actually cause more tax revenue to the state then they’re getting now, lessening that (hypothetical) $398M gap that I mentioned earlier. So there is potential for that not being as bad as it seems.
I’ve been to Hawaii and I’ve seen that big, cheap bottle… that’s what makes this so hard.
I’m by no means an expert on this stuff. And I’m sure I’m missing some major piece of information. So don’t get jumpy if reading this. Just interject more information as needed.
Also, I’m not opposed to other’s opinions. My vote is still uncast. I have until Tuesday. What do you think? If you answer, be respectful of other people please. I’m not looking for arguments, I’m looking for information and other thoughts.
I am not in favor (in theory) to the state losing revenue. The reality, however is that they will not. The state has the ability to tax the sales of alcohol (and other things). If they need more revenue, raise the tax and call it what it is, a tax. Don’t as they currently do tax the product and then make a 51% profit which they call revenue and not call it a tax, it is a tax so call it that.
The profit, oops revenue, until this year was 38%. They were notified that the state needed to raise a specific amount of dollars and the mark up was raised to 51%, and instant tax, a price increase in a monopolistic “business,” run by the government.
Perhaps the government could take over all the sales of televisions so all of us would go to a state run television store to buy a TV for $1,000 on a Monday. Then if the state needs more money, presto, the TV is $1,510 on a Tuesday. And, the state can say “we never raise taxes.”
The government should provide essential governmental functions and support those functions through tax dollars. The sale of alcohol is not an essential government function and should be ended — and taxed as needed in an open and transparent process. Fact!
Doug said this on October 29, 2010 at 9:27 pm |
Hey Aaron…I can’t get behind the state run liquor store. I agree with the above comments. However, I can’t get behind the “sin” tax either, tax alcohol higher because it causes problems for society…NOT! Alcohol never “caused” anyone any problems. It is the user of alcohol that ends up causing problems. The users (people) who end up causing problems lack self-control, one of the fruits of the Spirit I might add. We the people are going to have to be vigilent in these times as government is going to find many crafty ways to tax us and not necessarily deliver on services. There you go…my two cents on the subjects of tax, state, and alcohol. (-:
Vic said this on October 29, 2010 at 11:43 pm |
@Doug… nice analogy to the TV store. Fact!
Better than my KFC example? Hmmm.
@Vic… Agreed, it’s the person over the alcohol. Self-control is a huge issue in more than just alcohol.
Thanks guys. Good points and well-taken.
asod said this on October 30, 2010 at 4:55 am |