CF Study: Booze Border Bleeds Losses in Taxes

Member Group : Commonwealth Foundation

Contact: Jay Ostrich 717.671.1901; cell: 717.649.6547 | [email protected]

CF Study: Booze Border Bleed Loses Billions in Taxes, Sales

HARRISBURG, PA (09.01.11)—The Commonwealth Foundation released today a price comparison study showing average wine prices were cheaper in all Pennsylvania border states and that bootlegging across state lines has cost billions in lost sales and tax revenue.

The free-market think tank’s month-long study compared prices from Pennsylvania’s top 50 best-selling wines and spirits with prices of the same product in bordering states. The study concluded that wine was less expensive in all bordering states, from an average of 20 percent lower in Maryland to three- percent lower in New Jersey, ranging as low as 25 percent cheaper for top-shelf wines in Ohio.

Average prices for spirits were found to be significantly lower in Ohio, Delaware and Maryland, but higher in West Virginia, New York, and New Jersey.
"Privately run wine and liquor stores don’t exist within yards of our state borders for fun, they exist to take money from Pennsylvanians by meeting consumer needs," said Jay Ostrich, director of public affairs. "Consumers just want the freedom to buy what they want at cheaper prices, which is something they’ll never get with the government selling booze in Pennsylvania."
The study also outlined economic hemorrhaging due to ‘border bleed,’ a condition caused by consumers bootlegging alcohol across state lines. In 2010, the PLCB commissioned a study of border bleed within Berks, Bucks, Chester, Delaware, Lehigh, Montgomery, Northampton, and Philadelphia counties. In these eight counties alone, the study found out-of-state purchases represented $180 million in lost sales and more than $40 million in tax revenue annually. Extended over time, Pennsylvania businesses and taxpayers have lost billions in sales and tax revenue to bordering states.

"Consumers shouldn’t have to bootleg booze to buy what they choose, but they are doing so and it costs taxpayers and entrepreneurs dearly," said Ostrich. "It’s long past time our legislators remove government from the booze business and allow taxpayers and consumers to enjoy the benefits of freedom through free markets."

The PLCB study also found that despite the illegality of transporting alcohol back into the state, 45 percent of consumers from Philadelphia and surrounding counties purchase some or all of their wine and spirits outside Pennsylvania. As a solution, the Foundation is recommending the state allow private businesses to sell wine and spirits to residents, as all bordering states already do.

Although recent legislation aimed at privatization would double the amount of wine and spirits stores in the state, the CF study found Pennsylvania would be best served if the number of outlets neared the national per capita average of stores. Pennsylvania consumers would then choose from more than 2,800 liquor stores and 6,600 wine stores.

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