Turzai Dispels LCB Revenue Myth

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November 23, 2010

Turzai Dispels LCB Revenue Myth

HARRISBURG – The Pennsylvania Liquor Control Board (PLCB) only transfers about $90 million in profits to the state’s General Fund according to PLCB documentation, House Republican Whip Mike Turzai (R-Allegheny) said.

"The best approach for long-term revenue growth and consumer satisfaction is to take government out of the liquor business altogether," Turzai said. "It’s a fact that the bulk of money transferred for budget use from the PLCB comes from taxes."

Last week, the PLCB announced a six-month moratorium on its more than $100 million "handling fee" increase to wine and spirits manufacturers. As part of the announcement, the agency again touted its "return" of nearly $500 million to the General Fund.

The notion the state’s General Fund gets a massive annual infusion of money from the PLCB is a myth. On average, over the past 11 years, the PLCB has only transferred $90 million annually from its "profits." Taxes on the sale of wine and spirits, which currently approach $400 million, will be generated regardless of whether the state or private industry is in control of sales.

Turzai’s plan to modernize the state store system is estimated to bring in $500 million annually by changing the current tax structure to one that would be similar to a majority of other states. The Johnstown Flood Tax would be abolished once and for all.

The PLCB, as part of its announcement last week, also included a list of legislative suggestions PLCB officials claim would make everything "right" with their agency.

"No amount of reforms or improved business practices will replace privatization and competition," Turzai said. "My legislation will bring in at least $2 billion initially, and about $500 million annually through a revamped tax structure."

The board’s latest attempts at modernization, according to Turzai, are "out of touch with common sense." These efforts include peddling wine in supermarket kiosks requiring customers to swipe a credit card, blow into a breathalyzer and wait for an PLCB employee at a centralized location to "OK" the sale; and its "Mother’s Day Holiday Special" advocating residents purchase vodka as a gift.

"The fact is, government is not private business. It simply cannot compete with private industry by pretending it is something that it is not," Turzai said. "When it comes to the PLCB selling wine and spirits, we all need to ask: ‘Should Pennsylvania really be in the business of selling alcoholic beverages?’ How can the government agency charged with educating the public and regulating the industry, be in charge of maximizing sales of wine and spirits in the Commonwealth?"

Turzai’s legislation to truly modernize liquor sales in Pennsylvania, House Bill 2350 from this session, will be reintroduced in the 2011-12 legislative session. Turzai’s bill will:

• Reform the way wine and spirits are taxed, ending once and for all, the Johnstown Flood Tax.

• End the artificial mark-ups and handling fees and allow the market to dictate the price of wine and spirits.

• Auction off wholesale and retail licenses to private businesses with a reserve price based on their fair market value (estimated to bring in at least $2 billion).

• Provide assistance to the current PLCB employees that would be affected by this transition through tax credits, tuition assistance and civil service preferences to continue working in state government.

• Give the board additional resources to succeed in its mission of enforcement, licensure, inspection and alcohol education.

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