Sunday, September 09, 2012

Captain Morgan's spiced rum at $47.52 a half gallon?

That is in Longview, Wash. See Liquor Buyers Cross State Line: Prices Went Up—Not Down—After Washington State Ended Control of Booze Sales, from the WSJ earlier this week. The state of Washington just recently privatized all of its liquor stores. Before that, privately owned stores could only sell beer and wine. Anyone wanting hard liquor had to go to a state owned store. Prices did not fall as expected because the state added some required fees.:
"Even before privatization, Washington had some of the nation's highest liquor taxes and fees, at $26.70 a gallon. The national average is $7.02 a gallon, said the Tax Foundation, a research group. Washington state's levies included government stores' 52% markup, a 21% liquor sales tax and a $3.77-per-liter excise tax.

And while those sales and excise taxes remain under privatization, new fees further raised prices: Liquor distributors must pay an additional 10% levy, and retailers another 17%. Distributors also are on the hook for any shortfall to the state if they don't generate $150 million from the 10% fee by April."
So Washington residents are crossing the border.
"In Rainier, the Oregon liquor commission said sales jumped 60%, compared with the same period last summer. Ms. Brumbles, of Rainier Liquor, added staff and store hours to meet demand from Washington shoppers. "You know how the week is before Christmas? It's like that every single day," she said."
The new, higher fees are helping to drive up the price in Washington. Part of those fees are passed along to the consumers in the form of higher prices. Businesses are not usually able to pass all of a tax like this along to the buyers. See If You Lower The Excise Tax On A Good By $1.00, Does A Firm Save $1.00 On Each Unit Sold?

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