Washington State liquor privatization has now been in effect for a couple years. When proponents of privatization were pitching the idea to the people of Washington, it was all about lowering costs and paying less tax.
Of course, consumers are paying less tax to the state directly, but the state is still getting its money. In 2013, the first full year of privatization, Washington collected roughly $500 million. This money came in part from taxes paid by the holders of private liquor licenses. And, like anyone who has taken a college course in business knows, if costs increase, businesses raise prices. And so they did.
A visit to any liquor store in the State of Washington will confirm that Washington has some of the highest prices for liquor in the country.
Now, whether this is part of the plan or not, the fact remains that charging high taxes on a commodity will cause a decrease in use. Take cigarettes, for example. Taxes have been raised and raised over the years, and consequently, consumption has gone down, and I don’t think any local or state governments really are concerned about that. One could theorize that a slight decrease in spirits consumption similarly wouldnn’t hurt the general public’s health and safety.
But, consider this: Seattle and other parts of Washington have one of the most dynamic and unique artisanal alcohol scenes in the country. Driven by the world-class wineries and wine regions in the state, Washington is also home to several producers making delicious beer, mead, cider, and – you guessed it – spirits and liquors. The high taxes in this state probably won’t cripple the likes of Jack Daniels or Absolut Vodka, but small distilleries that cannot bring their products to market without significant tax hurdles really puts them behind, and by consequence, ensuring the failure of some
Hopefully, the State will recognize that it has already recouped what it lost by letting go of state-owned liquor stores. We must hope that the State does not get used to the extra money coming in and leave things like they are now.
(This posting is not to be construed as legal advice. If any of the information in this posting relates to legal issues that you are facing, you should contact an attorney.)
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