Thirsty for better selection and prices, lawmakers failed to quench citizens’ desire to end Pennsylvania’s Prohibition-era liquor system before leaving for summer break.
Some politicians defended the government’s liquor monopoly by claiming it creates wealth for the state—a myth continued in yesterday’s Patriot-News article “Pennsylvania Liquor Control Board brings in $2.1 billion in revenue for fiscal year.”
Here’s the chaser…the PLCB has a $10 million tab. That is, it finished the year owing more in liabilities than the agency had in assets.
The $2.1 billion is before deducting the cost of the merchandise, other expenses and state taxes collected by the PLCB. The “profit” after expenses—in reality, excess markup charged to customers—was only $125 million.
Following the required transfer to police, alcohol programs and the General Fund (which was lower this year), the PLCB’s net gain plummets to $21 million. And this $21 million doesn’t even get the PLCB entirely out of the hole. The PLCB has been running deficits for years, starting the fiscal year with negative $31 million in net assets. The agency ended the year negative $9.8 million in net assets.
Who’s responsible for paying off those debts? Taxpayers. And remember every dollar the PLCB generates is money taken from consumers and taxpayers.
While the PLCB does transfer around $500 million annually to the state treasury, more than 85 percent of that money comes from taxes, the same taxes privately owned liquor stores would collect. In fact, privatization could increase tax revenue by unleashing entrepreneurs’ creativity to improve sales and recapture the sales and taxes lost to border bleed.
Seventy percent of Pennsylvania voters support getting government out of the booze business. When broad-based bipartisan voter support, transcending party lines, gender, and economic means isn’t enough to get the job done, something is broken under the dome. To learn why politicians delay, read our policy report The Squeeze and new commentary Labor Day is for Taxpayers, Not Unions.