Monday, July 11, 2011

Liquor Store Privatization Gains Support

Pennsylvania House Majority Leader Mike Turzai is expected to restart his effort to privatize state liquor stores with new legislation this week, with an endorsement from Governor Tom Corbett.

Various estimates say selling liquor licenses to private companies would generate anywhere from $200 million to $2 billion for the state. Turzai says a private system with more outlets would give residents "better selection, lower prices and greater convenience."

But the Independent State Store Union (ISSU), which represents liquor store managers, says Pennsylvania would receive far less yearly revenue under Turzai's proposal.

The new plan would swap the current percentage-based taxes on liquor for a "gallonage tax," which would range in price depending on the type of alcohol being sold. ISSU Policy Director Ed Cloonan says Pennsylvania's percentage taxes generate more revenue per gallon for the state than any gallonage tax in the country.

"And it's not because we have the highest prices. It's because we control the whole ball of wax," says Cloonan. "We collect the 18% tax, which I say is uncollectable in a private system, because those private owners, on day one, would be arguing to the legislature that they can't compete with private stores in other states with that tax."

Cloonan says the state system employs about 2100 full-time employees and 1000 part-time workers, working at about 600 stores.

Turzai introduced a similar measure last year, but it failed in the Democratic-controlled House. This year, backing from the Republican governor and a GOP majority in the House and Senate may win more support for privatization.