The Tribune Democrat, Johnstown, PA

May 14, 2013

Beer distributor: Privatization good for business


— What business owner wouldn’t jump at the chance to expand his or her business? Some of my fellow beer distributors, apparently.

The association that is supposed to be representing my business interests in Harrisburg opposes the liquor privatization bill currently in the Senate – a bill that would allow us to expand our selection beyond beer, and into wine and liquor. As a result, they’re standing in the way of a movement to bring Pennsylvania’s 1930s-era alcohol-control system into the 21st century.

It’s a baffling move. This bill is a clear win for beer distributors, offering us the first shot at purchasing new wine and spirits licenses. And not only would we have the exclusive right to purchase these licenses for the first year and a hefty discount on license fees, but the state would allow distributors to pay for their cost over four years at a reasonable rate of interest.

Any change to the status quo can seem daunting, especially for business owners currently generating a safe and reliable revenue stream and who could face new competition. But this legislation would ease the transition to a private market by giving beer distributors several options to ensure we can remain competitive.

While the idea of more competition may cause some fear, we can no longer afford to stand in the way of change.

It’s not just about the needs of my select business community. Encouraging distributors to grow their businesses would also benefit all Pennsylvanians. By allowing customers to purchase beer, wine and spirits at one location (and likely for a lower price than under the existing state monopoly), many Pennsylvanians would stop crossing the border to illegally purchase alcohol.

As it stands, the state loses an estimated $180 million in alcohol sales to other states every year. Bringing these sales back to Pennsylvania would generate significant tax revenue, giving the state more money to spend on services that benefit all residents – such as public safety and transportation.

And as the distributors grow and increase their sales, they would hire more employees.

As other businesses, such as grocery stores, expand alcohol sales, they would also add new workers to their payrolls.  

Studies of liquor privatization’s impacts estimate that passage of this bill would create thousands of jobs across the state and generate millions of dollars in economic activity and business development.

Privatization also would eliminate many of the burdensome regulations created by the state-controlled system that frustrate customers and distributors. Customers finally would be allowed to buy a six- or 12-pack of beer, rather than an entire case, encouraging them to sample new brews without committing to 24, or as many as 36, cans or bottles.  

They also would be able to enjoy a bottle of wine at a restaurant and take home what they can’t finish, expanding sales for restaurants while discouraging drivers from drinking more than they should, lest their expensive purchase “go to waste.”

At the end of the day, privatization is really just common sense. There’s a clear reason why 48 other states allow private businesses to handle alcohol sales: Government control isn’t effective.

The Pennsylvania Liquor Control Board generates revenue by taxing and marking up the alcohol it sells, and still ended last year with a negative $9.8 million in net assets.  

Private sales would generate the same alcohol tax revenue, plus added revenue from taxes on new businesses selling alcohol.  

That’s why I support legislation that would get government out of the business of selling alcohol.

Ending this Prohibition-era alcohol monopoly would be a win-win situation for citizens, taxpayers, businesses and responsible politicians trying to keep Pennsylvania on sound fiscal footing.

As a beer distributor, I think that’s something worth toasting.

Cheryl Umberger is the owner of Wet Your Whistle Beverage in Lebanon. She also resides in Lebanon County with her husband and four children. Her column is offered through the Commonwealth Foundation, a free-market think tank based in Harrisburg.

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