Get ready to empty the piggy bank because soon you could be paying the government even more for your booze. At least, that’s the Pennsylvania Liquor Control Board’s (PLCB) latest idea to cover the growing costs of its operations.
According to the Tribune-Review, the PLCB circulated a memo suggesting a 16.6% increase (from 30% to 35%) in the mark-up price added to each wine and spirits product. The proposal is a response to the growing personnel costs and new costs of government mandates, which the agency projects will lead to a decline in its “profits” for next fiscal year. But as we pointed out in the past, the PLCB isn’t any more profitable than the IRS. Any additional revenue it collects above the cost of its operations is essentially a tax paid by consumers.
Supporters of our anachronistic system have long defended the PLCB as a “cash cow” for the state, but this has never been true. More than 80% of the revenue generated by the PLCB results from taxes, which would still be collected under a private system. The lack of profitablity is even more obvious now that the PLCB’s costs are eating away at the small portion of “profits” it does transfer to the General Fund.
In its memo, the PLCB points out the difficulty in assessing the effects of its proposal on prices, but no matter the outcome, people will be hurt if the PLCB moves forward with their plan. If vendors decide to lower the prices of their products to keep competitive, they will have to absorb the losses. If vendors don’t change what they charge the PLCB, consumers will feel the effects in the form of higher prices. “People that buy at the state stores are going to pay more. Period,” says Dr. Antony Davies, associate professor of economics at Duquesne University. “The PLCB doesn’t have any competition,” Dr. Davies tells WTAE, “so you don’t have those forces pushing costs down.”
This isn’t the first time the PLCB has proposed a change in its pricing formula. A few years ago, the agency proposed and eventually adopted a shift to variable pricing in its handling fees. This decision currently empowers the PLCB to charge more for certain products if vendors increase their own prices.
Here’s the problem: Pennsylvanians have no choice but to live with these decisions, unless residents break state law and buy their liquor in other states (which does occur). But it’s still not fair to penalize entrepreneurs and those who don’t live near the border with a system obviously failing residents.
If Pennsylvania were to end the booze monopoly, one of the benefits (and there are many!) would be more choice and convenience for consumers and entrepreneurs who would no longer be subjected to the decisions of a small group of people in Harrisburg. Revenue for the state would increase as more job creators could expand their businesses, and more Pennsylvanians would buy their booze within state borders.
The lives and decisions of those in the wine and spirits industry should not be tied to a system well past its expiration date.