Record liquor tax proposed
OLYMPIA – In little Tekoa, Steve Gossett’s family has been running a 700-square-foot liquor store for more than half a century.
He stocked shelves there as a boy. Today, he’s the sole employee, working six days a week. His father, who opened the store, is gone now. But his 87-year-old mother still stops in to check on how her boy is running the family store, called “Gossett’s.”
On Tuesday, when Gossett heard that a Senate budget committee has proposed making Washington’s liquor tax the highest in the country, he started to phone his wife. Then he stopped, because he didn’t know what he’d say.
Already, he said, liquor taxes in Washington are nearly double what they are in Idaho. And for him, Idaho’s just two miles away.
“This is going to put me out of business,” he said Tuesday afternoon. “Every time they raise the price, I get one or two more people going to Idaho to buy their booze. … It only takes $100 a month to make a big difference for me.”
Since January, lawmakers have been talking about increasing “sin taxes,” on the theory that buying cigarettes or liquor are discretionary expenses – and bad for you, anyway.
But Gossett is one of those who argue that the proposed increases – 60 cents more per pack of cigarettes, $1.33 more per liter of alcohol – will hurt border towns. And a proposed 9.5 cent hike in the state gas tax will hurt even more.
“I tell you, it’s tragic, these little towns that used to be booming,” he said. “Who’s going to help you in a small community?”
It wasn’t a surprise that state lawmakers – needing hundreds of millions of dollars more to pay for state services – want to boost the liquor tax. They did it two years ago, raising the price about 40 cents per liter.
This year, budget writers in the House proposed a 50-cent-a-liter increase. The Senate proposed $1. Raising the tax on wine was considered, then rejected. And boosting the tax on beer – a strong lobby with union backing – fell flat in the statehouse after being proposed by Gov. Gary Locke during his final weeks in office.
In a surprise move early Monday, the Senate budget committee raised the bar on retail consumers a bit more for liquor, calling for a $1.33-per-liter increase. The amendment was rushed through within minutes, with no discussion. It was part of SB 6100, which also included new taxes on extended warranties and meat processors, but reduced a tax on nursing home residents.
If the full House, Senate, and Gov. Christine Gregoire go along with the plan, Washington’s liquor tax will be $21.27 per gallon, or about $5 per liter. It would be the highest state liquor tax in the United States, according to the Distilled Spirits Council of the United States.
Oregon – currently the nation’s highest – charges $17.80 in state tax. In Idaho, it’s $8.46 a gallon. In California: $3.30 a gallon.
“It’s extreme, to say the least,” said Mark Gorman, the trade group’s senior vice president for government relations. “More than 60 percent of the shelf price would be state and federal taxes.” (Federal tax is $2.15 per gallon, nationwide.)
Why the change from $1 more per liter to $1.33? That’s the cost of exempting two of the state’s big buyers of liquor – bars and restaurants – from the increase, according to Gorman. Bars and restaurants account for about a quarter of hard liquor purchases in Washington.
“The restaurant industry has really been hurt really pretty drastically” since the Sept. 11, 2001, attacks, said Sen. Margarita Prentice, D-Renton, who heads the Senate budget committee. People’s eating habits changed, she said, and restaurants have been struggling to survive. Saddling them with higher liquor taxes, she said, could put many people out of a job.
Liquor trade groups like Gorman’s shouldn’t complain, she said. After all, the same Senate recently approved a bill to allow liquor to be sold on Sundays in some stores.
“We did some good things for them,” Prentice said. “It’s never enough. They always want more.”
Sen. Mark Schoesler, R-Ritzville, is on the budget committee and voted against the bill.
“It’s a horrible vote for border counties,” he said. And consumers will have to shoulder the cost while restaurants won’t.
“If they (Democrats) pass all of the sin taxes that are proposed, it’ll be a wonderful marketing opportunity for Moscow, Lewiston and Coeur d’Alene,” said Schoesler, R-Ritzville. “This is great news – for Idaho.”