Liquor Privatization Passage Puts People First, Not Politics

For Immediate Release
Commonwealth Foundation
Contact: 717-671-1901

Liquor Privatization Passage Puts People First, Not Politics

Ending State Monopoly Would Help Fill Budget Hole

February 26, 2015, HARRISBURG, Pa.—In 2013, the Pennsylvania House of Representatives passed the first liquor privatization bill since Prohibition’s end more than 80 years ago. Today, the state House recommitted to expanding choice and convenience for wine and spirits consumers by passing liquor store privatization again—a lucrative move for both taxpayers and consumers.

“This is an important step on the road to ending Pennsylvania’s government-run liquor monopoly and joining the other 48 states that provide consumers with greater convenience, lower costs, and more efficient government,” commented Matthew Brouillette, president and CEO of the Commonwealth Foundation. “By ending the state’s conflict of interest as both promoter and regulator of wine and spirits, all Pennsylvanians will benefit.”

Brouillette said privatization would also boost the state’s bottom line:

“The revenue gained by privatizing would go a long way toward addressing the budget deficit without job-killing tax hikes. The reality is, the PLCB is not the money-maker for the state that its advocates claim. The House’s plan would net $1 to $2 billion in revenue while retaining, and even expanding, the tax revenues flowing to the state.”

Government monopoly proponents complain that the state will lose the “profit” that the liquor monopoly brings in, but the facts tell a different story.

Liquor Tax Revenue Facts

  • Nearly 85 percent of the revenue the PLCB brings into the state each year is from taxes on alcohol. Those taxes would remain under a private system.
  • Everything the PLCB takes in beyond taxes is a product markup—an increase in costs to Pennsylvania consumers. As a government monopoly, this isn't a profit so much as another tax. What supporters of “modernization” really want is for the PLCB to bring in more money by charging even higher prices to Pennsylvanians—who have no option but to pay government monopoly prices.
  • Under privatization, the state would actually take in more net annual revenue through taxes and license fees, according to a PFM group analysis. This is in addition to $1 to $2 billion in upfront revenue that is projected to come from ending Pennsylvania’s Prohibition-era system of wine and spirits sales. 

Advocates for the status quo also cite “social harms” as an excuse for government to retain its iron grip on alcohol sales. But the latest report from the PLCB itself shows that Pennsylvania ranks above the national average in underage drinking under the monopoly system.

Brouillette responded:

“Does government control really make us safer? The PLCB’s own report says otherwise: Nearly three-quarters of twelfth graders have tried alcohol at least once and the rate of binge drinking among college students is above the national average. Clearly the heavy hand of government isn’t solving this problem.

“We applaud House members for acting in the best interests of consumers and taxpayers and urge the Senate and Governor Wolf to do the same.”

Matthew Brouillette and other Commonwealth Foundation experts are available for comment today. Please contact us at 717-671-1901 schedule an interview.

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