by Joseph Coletti
Senior Fellow, Fiscal Studies, John Locke Foundation
A letter writer to the Hendersonville Times-News worries that private liquor sales would eliminate “profits for public advantage” and put personal profits ahead of the “control and prevention of underage drinking.” Alcoholic Beverage Control managers, however, seek personal profits just as much as a private business would. The current system paradoxically makes government want profitable alcohol systems that limit sales instead. A private system could allow government to focus on tax revenue and alcohol control without having to also be involved in the marketing, distribution, and sale of alcoholic beverages.
Duke professor Philip J. Cook, author of Paying the Tab: The Costs and Benefits of Alcohol Control, has made the case that higher alcohol excise taxes effectively control abuse and other negative effects of drinking. An excise tax could be revenue neutral to local governments. Imposing a tax on private alcohol distribution and sales separates questions of public policy from questions of retail management and consumer choice, with the likely result of better choices for consumers and more transparent funding for local government.
House Bill 971 would privatize alcohol sales and institute a $28/gallon ($5.50 per 750ml bottle) tax to replace the various streams of revenue that now go to government. Legislators could adjust the tax rate to make it revenue at current sales volumes, permit higher local tax levels for communities that want to further limit alcohol sales, or tie the tax rate to inflation. Any or all of these options would ensure taxes from liquor sales would provide for public advantage without having to balance public advantage with private profit.