Wyoming: Bill proposal could increase price of spirits and wine
Source: http://thesheridanpress.com/
December 27, 2017
Wyoming residents could see an increase in prices on wine and spirits beginning next summer.
The Joint Interim Revenue Committee approved a bill proposing a 3 percent increase in the maximum state profit on sales of wine and spirits earlier this month. The proposal will now be introduced when the Legislature meets Feb. 12 and needs a two-thirds approval to officially go to voting.
The 3 percent increase would raise the maximum state profit from 17.6 percent to 20.6 percent and would earn around $3 million annually for the state.
The official proposal, bill 18LSO-0145, states: “Sales shall be made at prices sufficient to return the cost of merchandise and all expenses of operation together with a profit, not to exceed twenty and six tenths percent above the cost of the merchandise.”
If passed, the bill would go into effect July 1, 2018. The proposal is not a direct tax on customers. Rather, it would increase the amount the state liquor division can receive from retailers when they sell wine and liquor. Of course, this would decrease profits for retailers, who may raise prices as a result.
Wyoming is one of 17 control states in the country, meaning the state has a monopoly on wholesale distribution of liquor – excluding malt beverages – and most wine. An exception allows Wyoming businesses to buy wine not listed by the liquor division from out-of-state distributors. Many border states have some form of government monopoly, as well, including Montana, Idaho and Utah.
The practice dates back to the early 20th century in Wyoming and farther back for some other states, stemming from the temperance movement that began in the 1800s. Today, the state monopoly means retailers must buy their product from the Wyoming liquor division warehouse.
Buying liquor from anywhere else is against state law and could result in a retailer losing its liquor license. Wyoming does not control distribution of beer, so retailers are free to buy it from any public or private company within or outside the state’s borders.
Rep. Mike Madden, R-Sheridan, chair of the revenue committee, voted in favor of the proposal, calling it a reasonable proposal. He also said it should have a good chance at passing in February because Wyoming’s shelf price on liquor is significantly below that of most neighboring states.
The $3 million barely makes a dent in the state’s overall budget gap of almost $400 million but is a relatively straightforward way to increase revenue without directly raising taxes.
The proposal probably won’t amount to an actual 3 percent increase in sale price, Madden said. Even if it did, he continued, a $10 bottle of wine selling for $10.30 would be negligible and not cause a decline in consumer purchases.
Of course, bars and liquor store owners are the retailers actually affected by the proposal. Monte Buchmaster, co-owner of the Mint Bar, voiced his opposition to the bill and said it would likely lead to an increase in prices for customers.
“How much does the state need to make?” Buchmaster asked. “I would be against it because there is so much increased pressure on bars and liquor stores and restaurants to comply with new ordinances, especially in Sheridan County, that it’s really hurt our business bad. We’ve seen gross revenue drop substantially because of this pressure, and then to see an increase in the cost of the product to go along with it, that forces us just to turn around and pass it onto customers, which doesn’t sit very well with anybody.”
As the debate for supplementing budget constraints in the state continues, increased liquor and wine prices could fill even the smallest of holes – but only if consumers don’t cut back.