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OR, WA & VA on verge of liquor law shake-up

September 22, 2010

Oregon, Washington and Virginia Eye Liquor Reform
By Oregon Tax News,

In November, Washington voters will have the opportunity to vote on two initiatives regarding the privatization of liquor stores and revising laws concerning regulation, taxation and government revenues from the distribution and sale of spirits.  If passed, Initiatives 1100 and 1105 will close state liquor stores and authorize private parties to sell and distribute liquor.  Although the initiatives will maintain the liquor excise tax, liquor profits will go to private retailers.  In addition, Initiative 1100 will eliminate beer and wine price controls and bans against volume discounts.  Beer and wine retailers will also become eligible to add a liquor license and will have the opportunity to buy liquor directly from manufacturers.

Costco donated more than $1 million to the I-1100 campaign.  The wholesale giant hopes to sell liquor to increase store revenue.  On the other hand, Seattle’s Komo News reported that Washington’s governor, Chris Gregoire, is opposed to both measures because they will significantly reduce state revenue from liquor sales.  The governor fears these initiatives will add to the state’s $3 billion budget shortfall.  

Governor Bob McDonnell proposed to make Virginia the 33rd state to take a free market approach to liquor sales.  The governor plans to privatize the wholesale, distribution, and retail sale of liquor to provide consumers with better service and convenience.  However, the state will continue to regulate consumption, generate needed transportation revenue, and streamline costs.  Governor McDonnell’s plan includes the auction of 1,000 retail licenses for grocery stores, smaller establishments, convenience stores and pharmacies.  According to the governor’s administration staff, the privatization proposal will not increase taxes but restaurants will have an optional tax if they choose to buy liquor from wholesalers at discounted prices.

Opponents to Governor McDonnell’s proposal are concerned that it will decrease state revenue.  According to the Washington Post stated, “Virginia’s Alcoholic Beverage Control board deposited $248 million in liquor profits, as well as excise and sales taxes, into state coffers during fiscal 2009.”  The liquor profits are so high in Virginia because $13 of the retail price goes directly to the state.  Proponents argue that privatization creates a larger tax base to generate more tax revenue because it increases the number of stores that may sell liquor.  In addition, the governor’s administration officials forecast that selling new liquor licenses could bring in $300 million to $500 million to the state.

Finally, gubernatorial candidate Chris Dudley made public statements about privatizing liquor sales in Oregon.  He believes that privatization in Washington, could decrease Oregon’s revenue from liquor sales as Oregonians travel to Washington to find cheaper rates.  Although the Oregon Liquor Control Commission (OLCC) does not expect that privatization of liquor sales in Washington would take a significant chunk of Oregon’s overall liquor sales, it concedes that Oregonians may question the core functions of state government and liquor regulations.

Oregon’s regulation of liquor nets $172 million a year, which goes to the state general fund, which flows to cities, counties and mental health and alcohol services.  Opponents to Dudley’s privatization proposition fear that privatization will add to the current budget deficit.

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Discuss this article

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Farquar October 14, 2010

“Privatization”? Corporatization is more like it, in a word.
The monster corporations (costco, wal-mart, et al) that are backing these maneuvers simply want to ship more money out of our state, and into their coffers. They do not care if it is a good idea for Oregonians. They do not care if our taxes go up, or our crime rate increases. They do not care if it increases drunk driving or availability to minors. They do not care who is harmed or what it does to the quality of life in Oregon.
They just want the money.
And to set the precedent here that their money dictates our state policy, not the best interests of its citizens.
Fight the out-of-state money. We do not need to be “more like” any other state to address Oregon’s issues.

TheReviewer October 21, 2010

Getting the government out of alcohol sales seems like common sense. Why do laws like this still exist? Prohibition ended like 80 years ago.

MWM October 21, 2010

It is the government that takes my money and gives me nothing in return, not Wal-Mart. Walmart will benefit, but so will private businesses, who will now be able to sell liquor. Buyers will also benifet due to lower prices. The government is all about using anti-trust laws to break up “monopolies” but when the citizens want to break up their monopoly they have a different stance. This is also the case with the industrial insurance initiative in Washington State, which will end the state held monopoly in it’s respective market. A monopoly can only be established via regulation, as monopolies can only be created by the point of a gun.

I am from Washington and voted for both initiatives regarding privatization of liquor sales.

Eric October 21, 2010

“The implementation of a straightforward, equitable pure-alcohol-gallon (PAG) tax for all alcoholic beverages would generate higher revenues for the state than does the present discriminatory method of taxing distilled spirits at a dramatically higher level than beer and wine.”

I haven’t read through the voter pamphlet, but this sounds like I’m just going to pay more for beer. Meh.

Hardy October 27, 2010

I voted against this measure. Our DUI rates and teen drinking rates are high as it is and this is just adding to the problem. The bigger corporations are just looking to make an extra buck for themselves and their yachts. I’d rather have that money going back to the state. And there needs to be a cap on licenses if this does pass, by openly allowing any in WA to apply and get one, makes us look like even more a drunken state. I don’t believe passing this will hurt Oregon though. I went to WSU and bought my liquor in Moscow, ID all the time because it was cheaper.

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