National Taxpayers Union (NTU) was extremely disappointed by Governor Wolf’s (D-PA) ill-advised veto of House Bill 466 last week. After multiple privatization efforts have stalled in the Pennsylvania Senate, the time was ripe for the state to do away with its antiquated liquor laws. While not perfect, House Bill 466 was a step in the right direction. Enacting the bill would have been a major triumph for the Commonwealth’s consumers and it would have jumpstarted a nascent private sector.
In justifying his decision to kill the privatization efforts, Governor Wolf’s veto message was an exercise in political sophistry. In it, he claimed that privatization of the liquor industry would lead to higher prices and less choice for consumers, despite plenty of evidence to the contrary.
The private sector has proven it can provide consumers with what they want at competitive prices in countless other states. When the government monopoly was established in 1933, then-Governor Gifford Pinchot, a strong proponent of prohibition, declared the arrangement would, "discourage the purchase of alcoholic beverages by making it as inconvenient and expensive as possible." His prognostication is still accurate today. It is estimated that the government monopoly in Pennsylvania on retail sales of liquor and wine increases prices by up to 50 percent more than in other states while also limiting the selection of products. The status quo is a dreadful arrangement for all consumers, businesses and taxpayers.
Simply put, selling alcohol is not a legitimate function of government, nor is it a wise use of taxpayer dollars; however, there is a place for government in the alcohol industry. By exiting the retail alcohol sales business, Pennsylvania could have better focused its efforts on licensing and enforcing liquor laws.
The proposed bill would have granted almost 14,000 current beer-sales license holders the ability to sell wine and liquor. In addition to the clear benefits that privatization would bring to consumers, it is estimated that the bill would bring in $359 million in fiscal year 2015-16 from the purchase of permits from the state. Likewise, the sale of inventory, property and fixtures, coupled with additional income taxes paid by private sector licensees plus liquor and sales taxes would generate an additional $220 million during fiscal year 2015-16.
Pennsylvania has perhaps the most restrictive, anti-consumer alcohol distribution laws in the entire country. House Bill 466 was an extraordinary opportunity to move the Keystone State’s alcohol laws into the 21st century. Unfortunately, Governor Wolf decided to side with unions and ensure the state’s draconian distribution system remained the law of the land. NTU strongly encourages the Pennsylvania General Assembly to quickly override the Governor’s veto.