Current Under PrivatizationJohnstown Flood Tax (18%) $297,700,000 Discontinued?State Sales Tax (6%) $92,489,000 ContinuedState Stores "Profit" (consumer markup) $105,000,000 DiscontinuedGallonage Tax $0 Tax Shift?CNI Tax and Other Businesses Tax Revenue $0 AdditionalAnnual License Fees for Liquor Stores $0 AdditionalTotal $495,189,000 ???
General Fund Revenue from State Liquor Stores, 2010-11
Source: Governor's Executive Budget, 2010-11, February 2010
Privatization in Pennsylvania could also entail more than just licensing retail stores, butoffer licensing for wholesale operationsthat is, the distribution of wine and spirits torestaurants and bars. The value of wholesale licenses could be equal to that of the retailstores. Privatization would also involve selling off the entire inventory of the state liquorstores. As of June 30, 2010, according to the PLCB the inventory on hand plus the value of assets of the state storeswas $320 million. We will never know the true value of privatization until taking up competitive bids forlicensesand legislators should work to ensure that privatization involves an open andcompetitive bidding processand we also recommend commissioning a financialassessment to get a clear estimate of the of the value. There is the idea that state stores provide $500 million each year to the state. However,most of this revenue (about $400 million) is from state alcohol taxes and state sales taxes.The restconsidered “state stores profits”is really just based on the markups of liquor, oran implicit tax on consumers at the government-run stores. This revenuewould be replacedby taxes under alicense plan.Lawmakers will settax rateseitherusing the currentliquor tax structureor replacing it with adifferent alcohol tax,such as a gallonagetaxand can set therate to match current revenues from taxes and state store markups. Additionally, by relying on private vendors, the state will collect corporate income taxesand other business taxes from operators, that government stores don’t pay. And byimproving service, selection, and reducing prices, Pennsylvania can recapture some of therevenue and economic activity lost to other states through “border bleed.” Second, there is the idea that Pennsylvania’s control system provides the best protectionagainst underage drinking and alcohol abuse. Yetdata from the National Survey on DrugUse and Health
rank Pennsylvania middle-of-the-pack, or worse, on rates of underagedrinking and binge drinking. According to Mothers Against Drunk Driving (MADD),Pennsylvania ranks 30
in DUI-related accidents per capita (1 being best, or fewest DUI-accidents). In contrast, neighboring New Jersey, has
the number of liquor stores(in a state two-thirds as populous and much more geographically concentrated thanPennsylvania) and only has about
thenumber of alcohol-related traffic fatalities.