Pay for Alcohol Reform With RACP Money

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We don’t have an Independent Fiscal Office score of the alcohol reform bill yet, leaving a vacuum that both sides are trying to fill with politicized predictions about the impact on the budget. The pro-cartel side thinks it’ll leave anywhere from a $100M hole (at their most honest) to a $500M hole (at their most dishonest).

The pro-consumer side thinks it’ll raise revenue on net, which I think is quite possible from all the additional license sales, income taxes, sales taxes, and property taxes from expanding this market. But the fact is that we still don’t know and everybody’s basically just making stuff up at this point, based on how they feel about the general merits of the idea.

I think it’s not a good idea for the pro-consumer side to lead with more revenue as a selling point, because it may turn out that IFO says this loses a bit of money in the short run. And if that happens, we need to be prepared to argue that alcohol reform is worth doing anyway, regardless of its impact on the budget. This is worth doing because it’s a better deal for consumers and for the economy, not only because we think it’ll raise more money for public services.

And we’re going to be more persuasive if we have a specific pay-for to point at. I think if this turns out to lose a bit of money in the short run, we should take some money from RACP to keep things revenue neutral. RACP is basically a big lawmaker slush fund for “economic development” projects in their districts. I think there’s a solid argument to make that a more competitive and open alcohol market is going to pack a much greater economic development punch than many of the boondoggles and white elephants favored by most lawmakers, and so that’s where we should go looking if IFO says we come up short.

This entry was posted in Miscellany.

One Response to Pay for Alcohol Reform With RACP Money

  1. Albert Brooks says:

    We know that sales will increase just due to convenience alone. The real question is, and I doubt the IFO can give an accurate reading on this, is how much border bleed will decrease. All it takes is about a 10% total increase in sales and the increase in employment, business taxes, license fees and not having to pay for any further shortfall in retirement ($500+ million at the moment is the PLCB share) or medical (50+ million) to completely cover the total non-tax revenue turned in by the PLCB.
    This isn’t a guess. 10% of 2.2B in sales is $220 million. 25% (18% JFT, 6% sales and 1% missc) of that is $55 million. Washington increased taxes, increased border bleed and still increased in-sate sales 8%. Pennsylvania is not increasing taxes and convenience will decrease the over $300 million in border bleed by some amount. Since big box stores and grocery stores aren’t eligible for full liquor licenses (i.e. one stop shop) in the bills presented there will have to be new businesses and or an increase in size of current businesses (beer distributors) needed to fill the gap. Those payroll increases will create churn in the state economy which will help, in some small way, all of us. 6,000 people buying things is better than 3,000 people buying things

    Privatization IS Modernization