State should not encourage more alcohol consumption

The OlympianMarch 2, 2014 

Although there has been an alarming increase in the consumption of deadly and addictive drugs in the United States, it is a legal and socially acceptable drug — alcohol — that is most widely abused and commonly linked to social problems.

There’s no disputing that fact, as those who work in substance abuse, homelessness and domestic violence programs know.

And yet, politicians in states such as Washington continue to cater to those who push for greater consumption volumes, regardless of the social cost or practical implications to government revenue.

More than two years ago, voters approved Initiative 1183, the giant wholesaler Costco’s third attempt to privatize the distribution and sale of liquor in Washington. Fearing that 1183 might not pass, because state and local governments could lose millions of dollars in tax revenue, Costco voluntarily added a 10 percent distributor fee and a 17 percent retail fee to the initiative.

Opponents of liquor privatization, including this newspaper’s editorial board, warned voters that 1183 would not lower the price of spirits. Based on these new 27 percent fees, the initiative would, we said, actually increase the cost.

And that’s what happened.

Last year, just 18 months after getting voter approval on 1183, Costco was back lobbying legislators to remove the 17 percent fee. It was a cynical and offensive request.

Now, the state Senate is taking up Costco’s cause once again, this time using the argument that voters were duped by Initiative 1183. Nothing could be further from the truth.

The prime sponsor of this year’s measure, Sen. Janea Holmquist Newbry, R-Moses Lake, says in a news release that voters approved 1183 “on the presumption of lower taxes and relief from drastically high prices.”

Hogwash.

Voters knew that adding 27 percent to fees would push prices up. Or they should have. The senator’s statement is only true for voters who wallowed in blissful ignorance of the initiative’s actual language.

But never mind, the argument is now that Washington’s high spirits taxes are sending consumers across the Idaho and Oregon borders in search of less expensive booze. And that out-of-state purchases are robbing our state of tax revenue and forcing Washington liquor stores out of business.

This argument fails on several points. First, Washington consumers purchased spirits in other states long before 1183. This is nothing new. The state Liquor Control Board told The Olympian’s editorial board this week that the level of increased sales in Idaho is not significant overall.

Second, the reason many newly privatized liquor stores have gone out of business is because they cannot compete with large retailers, such as Costco, Safeway and others. Those who paid high prices for former state liquor stores had “gold rush fever,” and jumped in without a sound strategy to combat the convenience of picking up a bottle while getting the day’s milk and bread.

The fiscal impact on Holmquist Newbry’s bill shows the state would lose $66 million over the next four years. And that doesn’t count millions more lost to local governments.

Cities rely on those tax revenues to fix roads and maintain parks. The senator doesn’t present a plan to replace that money.

Governments use taxation to generate revenue, but also to nudge social policy. Higher “sin taxes” attempt to reduce abuse and harm by making alcohol or tobacco less accessible.

The only way government revenue remains stable under this Senate bill is if stores sell more alcohol. Surely that’s not the trend Washingtonians want their government to encourage through taxation policy.

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