Friday, July 29, 2011

Privatization of liquor sales would create opportunity for supermarkets

According to multiple reports, PA House Majority Leader Mike Turzai has introduced a bill that would result in the auctioning off of the state's 600 liquor stores and the sale of additional liquor licenses. A debate is raging among State House leaders over Turzai's bill (HB 11) and whether or not it makes financial sense.

According to Turzai, auctioning licenses could generate $2 billion for the state, which would auction 750 licenses to grocery stores and big box retailers, and leave 600 licenses for independent operators. Despite the license revenue, Turzai says his overall plan would be revenue neutral. With a privatized system, the state would not benefit from liquor sales, of course. Revenue would come in the form of license fees and gallonage taxes.

Pennsylvania and Utah are the only states that fully control alcohol sales, and more than half of U.S. states impose a gallonage tax on liquor and/or wine.

Not surprisingly, the union that represents liquor store employees opposes the plan, as it believes many union members would lose their jobs.

As for the affect on consumers, some legislators are saying Turzai's plan would result in higher prices. Turzai disagrees, and also thinks his plan would improve the customer experience in terms of selection and convenience.

In the end, it may be a moot point. Senate President Joe Scarnati, who pointed out that the state did not intend for the PLCB to be run like a business, would rather reform the current system than privatize it. Many of his colleagues seem to agree.

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