Policy Documents

Research & Commentary: Pennsylvania Liquor Control Board Fees

June 16, 2011

State Rep. Mark Mustio (R) has introduced a bill that would prevent Pennsylvania’s Liquor Control Board (LCB) from increasing handling “fees” on alcohol without prior approval from the legislature and governor. Pennsylvania is one of 19 states that give monopoly control over the sale and distribution of liquor to the state.

Proponents say they are offering the proposal in response to LCB’s plans for a significant increase in the state’s Logistics, Transportation, and Merchandise Factor fee (LTMF) by changing it from a flat-rate per-container fee to one based on a percentage of the item’s price.

Allowing an unelected bureaucracy to increase the handling “fees” on alcohol puts taxpayers and consumers in an extremely vulnerable position with little recourse. Mustio’s bill, House Bill 1661, would make the Liquor Control Board more accountable to the Pennsylvania Legislature and, more importantly, taxpayers. Changes in taxes and fees should not be allowed to bypass the legislative process unless done directly by voters.

States that regulate but still allow private liquor stores and distributors to operate can more accurately predict and set the necessary market price for the delivery and sale of these products. Regardless of whether one believes it is the proper role of government to run a state’s liquor stores, however, taxpayers should at minimum be allowed to hold their elected officials accountable for fee and tax increases.

The following documents offer additional information on government-run alcohol sales.

Government-Run Liquor Stores
http://www.budgetandtax-news.org/article/30146
This Commonwealth Foundation policy brief considers what might happen if Pennsylvania allowed liquor stores to be run by the private sector: “Divestiture of Pennsylvania’s state liquor stores would represent a financial windfall to the state, while posing no threat to public safety, as it would not result in the social ills many opponents of privatization fear.”

Study Shifts Outlook on Liquor Consumption After Privatization
http://www.publicopiniononline.com/localnews/ci_18220102
Public Opinion details a recent study on deregulation of alcohol, which found per-capita alcohol consumption declined after deregulation in Iowa and West Virginia. Also, rates of underage drinking and drinking and driving are “virtually identical in both license states and control states.”

Research & Commentary: Privatization
http://www.budgetandtax-news.org/article/28305
This Heartland Institute Research & Commentary examines privatization and outlines some of the benefits it can provide a state if done correctly: “Privatization has been successful in streamlining government services, reducing costs, and creating more private-sector jobs.”

Pennsylvania Liquor Control Board Pares Down Inventory on Wine and Spirits
http://www.pennlive.com/midstate/index.ssf/2011/02/pennsylvania_liquor_control_bo_5.html
The Patriot-News reports on the removal of 400 liquor products by the Pennsylvania Liquor Control Board. State Rep. Scott Perry (R-Dillsburg) is quoted as saying, “I personally think this is just an indication the state liquor system’s time has come and gone.”

Pennsylvania Liquor Control Board Introduces Telephone Tip Line
http://regulatorysafety.drinks-business-review.com/news/pennsylvania-liquor-control-board-introduces-telephone-tip-line-240511
The Drinks Business Review reports the Pennsylvania Liquor Control Board has set up a telephone “tip line” to discourage “fraud and abuse within its stores.”

Spirit of the Law: Add LCB Fee Distribution Process to Items Legislature Needs to Update
http://www.pennlive.com/editorials/index.ssf/2011/05/spirit_of_the_law_add_lcb_fee.html
The Patriot-News editorial board explains how fees generated by the LCB are used by municipalities to balance their budgets, and there are “no requirements for a community to account for the money.”

 

For further information on the subject, visit The Heartland Institute’s Web site at www.heartland.org.

Nothing in this message is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. If you have any questions about this issue or the Heartland Web site, contact Director of Government Relations John Nothdurft at 312/377-4000 or jnothdurft@heartland.org.