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Letter


An Open Letter to the House: Support House Bill 1661, Protect Pennsylvanians from Predatory Fees on Wine & Spirits

June 24, 2011

Dear Legislator:

     On behalf of the National Taxpayers Union’s (NTU’s) 17,000 members in Pennsylvania, I urge you to cosponsor and work toward immediate enactment of legislation authored by Representative Mark Mustio that would ensure greater fiscal responsibility in the operations of the Pennsylvania Liquor Control Board (PLCB). This long-overdue proposal, House Bill 1661, requires prior approval of the General Assembly and the Governor before any price or fee increase from PLCB could be implemented.

     In an ideal commercial environment where buyers and sellers act as free agents, pricing decisions should be governed by market forces. Business owners charge what they hope to be fair for the value of their goods and services, while consumers render their judgment by “voting” with their dollars. The Commonwealth’s policy toward wine and spirits is quite a distant departure from this model, since state government has bestowed a monopoly upon PLCB for the package-retail sale of such beverages within its borders. This practice, in turn, confers upon elected officials a special responsibility to hold PLCB accountable for fees and charges that directly affect the people of Pennsylvania – people who generally have little choice but to shop within the state-controlled system.

     Meanwhile, for its part PLCB’s recent rate-setting behavior has hardly been reassuring. Earlier this year the Board nearly prevailed in a bid to boost the Logistics, Transportation and Merchandise Factor fee that could have considerably increased the financial burden on shoppers. More recently, in April, PLCB announced a new scheme that would convert this charge to a percentage-of-cost calculation. This would constitute a rather strange basis for a per-bottle add-on more commonly called the “handling fee,” made all the more so by PLCB’s proposal for instituting a bailment system for its warehouses (ironically diminishing its own “handling” of stock).

     For many years, policymakers have had available to them a comprehensive and practical response to problems such as these: extricate the government from running (as opposed to regulating) the wine and liquor trade, thereby allowing Pennsylvania retailers to provide these products to their fellow citizens. NTU will continue advocating this approach for Pennsylvania and other states. During the interim, however, House Members should recognize their oversight responsibility to protect Commonwealth residents from PLCB’s potentially predatory future acts. House Bill 1661 is an appropriate, non-controversial tool for this vital task, and our members hope you will actively support its swift passage. 

Sincerely,
Pete Sepp
Executive Vice President

 

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