Sunday, January 15, 2012

1183 - Booze Will Be Cheaper, Right?

When Washington State voters approved Initiative 1183 last November, many of them were convinced the days of Washington having among the highest prices for liquor in the nation were a thing of the past.  Sorry, no.  The state taxes on liquor are not going down or away.  And, to overcome a major objection to its previous effort to privatize liquor sales in the state, Costco inserted language in 1183 that guaranteed the state would not lose money from the closure of its state liquor stores.  Here's how it works:
March 31, 2013– Distributor license fees must equal $150 million to the State of WA on this date.
 Any shortfall in that figure is allocated among distributors based on their share of 2012 spirits sales.
Expected shortfall:  $100 million.  Distributors are already figuring this into their wholesale liquor pricing.
Distributors pay 10% of gross profits on spirits to the state for  1st two years, 5% thereafter.
Retailers pay 17% of gross profits on liquor sales to the state.
$35.67 taxes on each $100 Wholesale cost - Spirits

Does this look like a formula for lower priced liquor in Washington State?