Auditor General Jack Wagner Wednesday said he could not support proposed legislation to privatize the state’s liquor stores because it is a bad deal for both taxpayers and consumers.
Wagner said that the Department of the Auditor General’s analysis concluded that privatization would lead to higher prices on many popular wine and spirits and would fall short of collecting the $470 million the Pennsylvania Liquor Control Board transfers to the state’s General Fund every year.
Wagner testified against privatization when he appeared before the House Liquor Control Committee in Philadelphia today.
“In certain instances I support privatization because I believe it can be beneficial in appropriate situations,” Wagner said. “However, I oppose privatizing the state’s liquor stores because the negatives far outweigh any potential benefits.”
Wagner said the proposal is a bad deal for taxpayers because in this depressed economy there was no promise the sale of wholesale and retail licenses would generate the almost $2 billion that has been suggested by proponents of the legislation.
Also, once the wholesale licenses are auctioned off, the reliable annual income generated by state control of retail liquor sales will be far from guaranteed because the state would no longer collect the taxes directly.
Privatization would be bad for consumers because the proposed tax on wine would be the highest in the nation and the 11th highest tax on spirits, inevitably leading to higher prices, Wagner said. In addition, the selection of wine and spirits available to consumers will greatly decrease under privatization.
Each PLCB store carries nearly 2,500 different products, Wagner said. Costco, which was recently named Market Watch’s 2011 Retailer of the Year, carries about 140 different wines and 32 different spirits.
Wagner said that, aside from the fiscal impact, he was greatly concerned that privatization would result in less convenience for people in the state’s rural areas, requiring customers to drive long distances to buy wine and spirits.
Wagner suggested that the General Assembly could greatly improve customer convenience by changing the Liquor Code to allow all state liquor stores to be open seven days per week, 12 hours per day, which would eliminate any rationale for privatization.
