Letters to the Editor

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LIQUOR: Legislative fix needed to protect consumers

Letter by David M. Ozgo, Washington, D.C. on May 4, 2012 at 2:12 pm | 12 Comments »
May 7, 2012 11:05 am

Re: “New liquor sellers fear fees threaten viability” (TNT, 5-4).

The article highlighting alcohol retailers’ concerns about steep tax hikes under the state’s new liquor system referenced a particularly insightful comment by Liquor Control Board Chairwoman Sharon Foster: “A legislative fix is your only fix.”

No one can know for certain what alcohol prices will be until Initiative 1183 goes into effect June 1. One thing, however, is for certain. Washington state had the highest alcohol taxes in the nation prior to privatization, and now even more taxes and fees are being added with the new system. It will be up to legislators to protect consumers and retailers during this tumultuous time.

Under the new system, consumers will continue to pay the 20.5 percent spirits sales tax and $3.77 per liter excise tax, and also two new taxes on gross receipts, including a 17 percent retail tax and a 10 percent wholesale tax. Taken together, the new effective sales tax rate on a bottle of spirits in Washington state will approach 100 percent on many purchases. Consumers will no doubt be left with a hefty tab.

Legislators should immediately begin considering a rollback of these confiscatory distilled spirits taxes which surely will overwhelm consumers, hurt the state hospitality industry and add to further lost revenue from cross-border sales.

(Ozgo is chief economist with the Distilled Spirits Council of the United States.)

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