Competitive Enterprise Institute
Privatizing Pennsylvania’s liquor stores has been a subject of debate for decades. Proposals in the past have been met with fear about the effects privatization would have on public safety and skepticism about the need for change. Most recently, Rep. Michael Turzai, Pennsylvania’s House majority leader, introduced a bill that would sell of state-owned liquor stores and provide more licenses for private businesses to retail liquor and wine and this time it looks like the proposal might have a chance.
The difference this time around is residents’ increasing frustration with the Pennsylvania Liquor Control Board’s draconian policies, and the growing body of evidence that privatized liquor sales would not adversely affect public safety. In fact, privatization would increase choices for residents and would actually bring more money into the state than the current government control system.
To add to the growing body of evidence, the Commonwealth Foundation, a Harrisburg-based public policy group, published a new study that examines the failure of the state’s liquor regulations. While Pennsylvania residents already know that the selection at liquor stores leaves much to be desired compared to neighbor states, the Commonwealth study puts that inconvenience into stark detail. When comparing the number of alcohol stores in Pennsylvania versus the national average, Pennsylvania is clearly behind the curve.
Population Per Alcohol Retail Store (Off-Site Vendor)
- Spirits: 19,926
- Wine: 16,470
- Spirits: 4,461
- Wine: 1,897
Number of Outlets for PA to be at National Average
- Spirits: 2,832
- Wine: 6,660
Sources: Spirits Stores: NABCA, Beverage Information Group, and state websites, compiled by DISCUS; Wine Retail: Adams Handbook Outlet tables — “Off Premise Vendors,” 2010; Population: US Census, Population Estimates, www.census.gov
Prepared by Commonwealth Foundation, www.CommonwealthFoundation.org
This doesn’t even take into account the fact that because liquor stores don’t need to compete with one another, their hours aren’t based on consumer demand. These state-stores have often been criticized for having operating days and hours that are inconvenient for consumers. Some stores, especially those in rural Pennsylvania, are only open for a few hours each week.
Then there’s the price of alcohol in Pennsylvania. When the Commonwealth Foundation compared prices in Pennsylvania with its neighbors, they found that liquor was cheaper in all six border-states and wine was cheaper in three.
Of course, most Pennsylvania natives know this already and some still support the control-state system based on the assumption that state control of alcohol improves public safety and is worth the inconvenience. Here too, the Commonwealth study examines and debunks that presumption. They found that when looking at alcohol related deaths and traffic fatalities related to alcohol, Pennsylvania ranked in the “middle of the pack” with no substantial deviation from the national average and worse when compared to some neighboring non-control states.
I wrote about this same topic last year and took a look at fatality and crime rates in other locations that had switched to a private system of alcohol distribution and retail sales and came to similar conclusions.
Perhaps the most damning evidence the study provides is that the state’s monopoly on alcohol sales is less profitable for the state than a private system would be. The control system has encouraged an increasing amount of “border bleed,” which is the amount of Pennsylvania dollars purchasing alcohol in neighboring states. While most efforts to privatize liquor sales in Pennsylvania have failed due to regulators’ concerns about lost tax revenue, the Commonwealth study shows that residents have been increasingly purchasing their booze in neighboring states, attracted by the better prices, selection, and service that competitive markets have developed.
This is something the Liquor Control Board is already well aware of, as their own study of 8 Pennsylvania counties found that residents were making purchases out-of-state worth $180 million and $40 million in tax revenue that would have otherwise filled the Pennsylvania coffers. Imagine how much the total would be if they examined all 67 of Pennsylvania’s counties.
Hopefully, this study along with all of the other evidence and growing demand for change in PA will convince lawmakers to seriously consider Rep. Turzai’s proposal. Of course, if the Johnstown flood tax is any indication (it’s an 18% tax on liquor for a flood that occurred in 1934), it takes a long time to change things in the Keystone State.
Read more: http://www.openmarket.org/2011/09/12/losing-control-of-pennsylvania-liquor/