IN MY OPINION
The downside of privatized liquor sales What's your opinion? By David Bender, Special to the Sunday News
Want to know what drinking looks like in Pennsylvania? Put 100 adults in a room with 100 bottles of liquor. Come back later and you'll find 7 of them drinking half the bottles. The other 93 are cleaning up the mess. Throw in adolescents and it gets uglier. Toss the latest plan for privatization into the room and you start writing hefty tax checks, especially if you're one of the 93.
Privatization is not bad, but it's not free. Despite claims of revenue neutrality, it's not even close. The mostly unread 200-page bill that hit the House floor completely changed the sources of budget revenue. But not one person voting on it reviewed an analysis of longterm financial impact. That's because no such analysis was prepared. What business owner would sell an asset without that information?
You own this asset. It's up to you to demand the accounting. Legislative leadership failed to check the state pension numbers in 2001 and created the multibillion dollar crisis you're paying for today. They'll do it again unless you insist otherwise.
Don't like math? Let's have fun. Say you own a machine pumping out $550 in cash this year. A guy in a nice suit says he'll give you $800 for the machine and you'll get $500 plus small increases every year. Not a bad deal if you invest the money in another machine. But you're broke. So you spend the $800. It's gone.
You're happy until you recall how the machine increased your payout every year. By year 10 it's cranking out $900 to the new owner; by year 20 it's up to $1,500. The small increases promised by the guy in the nice suit don't come near that, so the gap is at least $300 in year 10 and $700 in year 20. Add six zeros to those numbers and you get the current version of privatization. You, the taxpayer, will be called on to fill a $700 million hole. All for someone else's cheap vodka.
I'm a free market guy and understand why you're being asked to give up your share of ownership in the stores. But anyone making that argument needs to acknowledge the cost. The only way to balance the books with privatization is to raise the liquor tax from 18 percent to at least 30 percent depending on which bill is passed.
Being one of the 93 percent who don't pound down bottles, I'd be fine with that increase. The 7 percent who drink the most ought to pay the most. But the latest proposal doesn't do that. It picks up one end of a table holding treasure that currently belongs to all of the citizens and sends that money sliding into the pockets of licensees and the controlling distilleries in France, Britain, India, South Africa and China. It hits up 93 percent of hard-working Pennsylvanians for what was lost. Those who drink the least will pay the most.
Just ask yourself these questions: Will easily accessed alcohol lead Pennsylvania to global excellence? Will a greater selection of alcohol improve the health of our citizens? Will it raise workforce readiness? Will it enhance technological innovation? Will it improve academic performance? Will it foster the development of new cutting edge industries?
You know the answers. Privatize or don't, but give us an accounting.
David Bender is executive director and CEO of Compass Mark, a nonprofit organization dedicated to reducing the incidence, prevalence and consequences of the abuse of and addiction to alcohol and other drugs.
Please see OPINION, page 4
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