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Gov. Bob McDonnell's town halls on liquor privatization didn't have quite the pizzazz of a Smirnoff ad. There were no free shots of vodka or tequila, and he didn't promise his audience that they'd be paying less for their whiskey and rum if he succeeds in dismantling the state monopoly.
It's likely those meetings would have been livelier had he promised cheaper liquor, but he can't. The reality is that the prices Virginians pay won't change much.
A survey of prices in the Old Dominion and surrounding states reveals only small differences in current costs, although in privatized states, that can vary between stores, products and days of the year.
A fifth of Jack Daniels black label, Virginia's most popular tipple, costs $24.68. Elsewhere, the price ranges from $20.12 at a private store in Maryland to $27.34 in West Virginia, where the state controls wholesale distribution to private stores. Imbibers with a silver-plated palate have a greater incentive to bargain shop. A bottle of Hennessy XO cognac sells for $188.95 in Virginia, including tax, but can be had in Maryland for just $168.54.
The test McDonnell must pass to win support for privatization is this: He must preserve the revenues Virginia depends on to pay for a variety of services, including education, health care and law enforcement. Last year, profits and taxes totaled $259 million.
But in order to do that, Virginia must charge so much in taxes on each bottle that the cost to the consumer isn't likely to change. The 69 percent markup the state now adds to each bottle can largely be replaced with a hefty wholesale tax. Virginia's 20 percent liquor tax and 5 percent sales tax won't go away, either.
But making the numbers work is only one part of the equation for the consumer.
McDonnell must also address the community impact as Virginia changes how liquor is sold. The governor believes the state will recapture sales it now loses to neighboring states.
While there is likely to be some bump in commerce, Virginia has already partially plugged that liquor leak by allowing stores to open on Sunday in metropolitan areas. Further success will depend on letting private retailers make late-night sales and advertise heavily, an injection of capitalism that may not be welcomed in every community.
McDonnell's second, and related, challenge is to reassure lawmakers that profits won't erode under pressure from a new and powerful liquor lobby made up of heavyweights like Total Wine, Costco, Wal-Mart, Kroger and major distributors. Those businesses may be happy, for now, with the prospect of making some space for booze on existing shelves. But how long will they be satisfied to give Virginia a larger share of the revenues than they do in other states?
Virginia's 20 percent liquor tax is already among the highest in the country, and a hefty wholesale tax would secure the commonwealth's top rank.
A 2005 missive from the Distilled Spirits Council of the United States provides insight into future battles in Virginia. When the Kentucky governor proposed a 6 percent increase in alcohol taxes, atop a 9 percent wholesale tax and a $1.92 per gallon excise levy, the council predicted a "devastating impact on the state's economy, potentially costing 400 Kentucky jobs and resulting in millions of cross-border sales."
Virginia liquor retailers don't lobby government because they are the government. If the state goes through with privatization, the cost of the deal will include resisting industry pressure for more favorable terms.
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Privatization
If the government had of moved with privatizing Social Security everyone who had lost funds when the economy changed would remain fundless! It is a bad idea period!The rich get richer, Please give me a break!
The reasons against..
what the Governor proposes, as far as this editorial is concerned, appears to be about the actual price of liquor. That is irrelevant to the discussion, as far as I can tell. The actual issue is about infrastructure and the COSTS of being able to 'supply' this product (booze) to consumers. How much of the present tax on alcohol pays for that infrastructure and the salaries that go with it? That's what has to be looked at. While no one wants to see people put out of work, as would certainly happen if the state's stores are closed and/or sold off, it doesn't make any sense either to pay an inflated price for a product for the sole purpose of keeping some people employed as well.
The private sector has shown they are quite capable of handling the transactions involving beer and wine, and the same common requirement applies to all alcohol, the purchaser must be at least 21 years of age and to prove that if need be. Period! Nothing different happens in a state alchol store, no specific measures are enacted to ensure that the buyer is forbidden from buying or consuming alcohol. End this practice, and save the tax payers at least SOME money! One more thing, I'll wager that if Gov. Kai
you mis-read the editorial
The editorial, and every article written concerning the privatizing ABC stores notes that in ZERO states where the state gave up the ABC stores did the states break even. EVERYONE of them took a MULTI-MILLION hit.
You wanna give up guaranteed revenue and pay higher taxes so the politicians can have another money source? Another private pocket liner? When the privatization occurs and your taxes go up to make up the lost revenue, Who ya gonna blame it on? The Democrats? Hypocrisy.
It will be the Moral GOP and supporters who swindled you, just like they did when they privatized mental health in the 1980s, and again when they privatized VDOT over the last two decades.You know why there are no newspaper articles telling you about the Privatization savings at VDOT? Because There ain't no savings. The truth is YOU ARE PAYING THROUGH THE NOSE.
Please provide sources..
for what you claim and assert. There are many, MANY sites on the 'Net that offer both pro and con opinions, assertions, predictions, etc., when it comes to privatizing the sale of liquor, both here and in other states. Why, if the revenue stream is so good and the govt will impose taxes elsewhere to make up for the lost money if the stores are privatized, does the state not monopolize the sale of, say, shoes? How about other clothing? If the criteria involves a potentially hazardous substance, which liquor certainly qualifies as to some, why doesn't the state handle all sales of gasoline, or propane? What else do you think the state should be in control of when it comes to consumer products?
"and save the tax payers at least SOME money!"
Show us the numbers so we can tell which method is the best financially for the state.
The point is..
that the govt, at any level, should not be involved in the selling of a consumer product. It's one thing to tax and regulate, but quite another to be the ONLY source for one. I'll ask you what I asked another poster: what is it about liquor that justifies the govt monopolizing the sale of it that other consumer products don't have? If the state is going to monopolize liquor, why stop there? And what are those other products the state should be handling all aspects of, as far as you are concerned?
Completion of above post...
End this practice, and save the tax payers at least SOME money! One more thing, I'll wager that if Gov. Kaine had advocated the same thing as Gov. McDonnell is proposing, the editorial would be all in favor of that..
save the tax payers at least SOME money
Have the fellow who wrote the above post pledge to make up the difference between the 231 MILLION dollars the ABC stores, and their employsee put into the General Fund, which we as taxpayers didn't have to pay, and what will be the end result of privatizing the ABC stores. Have this fellow and the Governor pledge that for the next four years,they will pay the difference between every penny below the 231 million dollars in PROFIT that the ABC stores now make, and what revenue comes from privatization brings in.
Have these greedy, moralistic politicians put something tangible on the line instead of taxpayer monies.
So, by your own words..
the govt is now a 'for profit' enterprise? And I'm still waiting for an answer from anybody as to what other consumer items and products the state should also monopolize, given how it's now all about how much money is involved?
Privatization - Poorly Researched, Bad Idea
Eager to fulfill an ill advised campaign promise, Guvna Bobby is pushing hard for privatization of liquor sales in VA in spite of a lack of facts to back up his position. The initial windfall projections might be enticing, but the inability to maintain the current annual revenue stream must outweigh the the "pay me now" mentality that is driving his position. The Commonwealth can't afford another loss of revenue when our roads and bridges are in shambles and an embarrassment. Most residents don't want liquor stores that stay open late, run ads, flash neon signs in their barred windows. And none of need double or triple the number of stores than what currently exists. If the Governor and his staff would devote as much time and energy to our transportation, mental health and public safety needs as they are to this lame-brained idea, the Commonwealth would be much better off. And fixing our roads would play much better in his future campaign for President than selling off the liquor stores would.