Thirty-two states have emerged from Prohibition-era liquor laws by privatizing liquor sales. While the enforcement of liquor consumption laws has been strengthened and the states’ revenues have continued to benefit from liquor sales taxes, consumers have benefitted from competition in the private sector.
Washington, however, continues in the archaic system of a state monopoly. Voters have two chances on the Nov. 2 ballot to privatize liquor sales, and The Columbian recommends a “Yes” vote on both. Initiative 1100 would privatize liquor sales and allow retailers to sell liquor with wine and beer. Initiative 1105 would do the same, but would require the use of wholesalers. Our preference of the two is Initiative 1100 because eliminating a middleman at the wholesale level accentuates the power of an open market. But both I-1100 and I-1105 offer a vast improvement over the status quo.
Here’s how bad that status quo really is: Washington state (with the highest liquor taxes in the nation) mandates a 10 percent markup from distiller to wholesaler, and another 10 percent markup from wholesaler to retailer. The result is a socialistic scheme and bureaucratic briar patch. Yes, this brings in big bucks for the state, but it does so by protecting such absurdities as a bottle of wine costing $2 or $3 more here than in California.
Opponents of both initiatives focus on two overheated but bogus warnings. First, local governments supposedly will suffer severe cuts in money from the state. As usual, public safety and other vital community services are said to be at great risk. However, state Auditor Brian Sonntag estimates that privatizing liquor sales could increase state revenue by as much as $350 million over five years. Even the Office of Financial Management qualifies its own lost-revenue projections with: “Fiscal impact cannot be precisely estimated because the private market will determine spirits bottle cost and markup.” Also, the Washington Policy Center points to “new Business and Occupation taxes that are not paid under the current monopoly system.” And the official wording of I-1105 says the change will “generate at least the same annual revenue for the state and local jurisdictions … as well as an additional $100 million.”
We’ll offer another reminder: Remember all the sales-tax revenue that was supposed to be lost to a statewide smoking ban, when in fact the revenue increased?
The second warning against I-1100 and I-1105 is that problems with alcohol consumption would skyrocket, and alcohol-related traffic fatalities would soar. However, 32 states cannot be wrong, and California (with private liquor sales) has fewer alcohol-related traffic fatalities per capita than Washington. By getting out of the liquor business, the state would shift its focus to enforcing liquor laws. And any loss of state jobs would be more than made up with an increase in private-sector jobs.
What, you might ask, would happen if both I-1100 and I-1105 pass? Which would prevail? In 1993, then-Attorney General Chris Gregoire issued a formal opinion related to two other initiatives. She noted that the Legislature could resolve any differences with a two-thirds vote. If that vote comes up short, the issue would be taken to the courts, and among the solutions there could be recognizing the initiative that receives the most votes.
That, though, is a technicality that can be pursued later. More pressing are the two questions before voters on Nov. 2, and the answers come easily. Initiative 1100 and Initiative 1105 — either or both — would end the outdated, cumbersome and anti-free-enterprise monopoly that our state holds over liquor sales.
To read more of The Columbian’s editorial endorsements, visit http://www.columbian.com/news/opinion.