There are many inane and inefficient aspects of Pennsylvania’s alcohol laws, as most residents of the commonwealth know, usually from frustrating experience. But one of the most wasteful aspects is one most people don’t see: the way the state’s alcohol bureaucracy needlessly places itself between restaurants and their suppliers of specialty wine and liquor.
A botched rollout of new Pennsylvania Liquor Control Board (PLCB) software has laid bare the way the state-run system makes offering distinctive items unnecessarily difficult and expensive.
Special orders — that is, requests for wines and spirits that are not in the PLCB catalog — make up a small proportion of PLCB revenues, about 4%, but are vitally important to the restaurants and boutiques that offer options that can’t be easily found elsewhere. In other words, they’re essential to the kind of establishments that contribute in unique ways to residents’ quality of life, and to attracting visitors to the state.
Besides making it harder for these businesses to stay afloat, PLCB markups make specialty wine and liquor options affordable for fewer people to enjoy.
In the current system, the PLCB inserts itself into the transaction between supplier and client, while ratcheting up costs (and gobbling up revenue) in several places. First, there’s a 10% PLCB markup on the supplier’s selling price. Then, there’s the 18% liquor tax. After that, the board charges a “logistics, transportation and merchandising factor,” or LTMF, that was just quietly increased as part of a botched software upgrade.
But there’s more! The LTMF is taxed at the liquor rate, then the entire sum is taxed at the state sales rate. Lastly, the PLCB charges an extortionate $3 per bottle “freight charge” — even though it’s already charged for transportation.
The result: A specialty bottle of wine that starts at around $6 from the supplier — and that might be sold to a restaurant in another state for $9 — costs $15 in Pennsylvania. Scaled to the thousands of bottles a restaurant might use annually, the result is an enormous and unnecessary tax on creativity and entrepreneurship.
The system, including new software that has confounded the PLCB’s clients, seems designed to make working outside the established catalog as unwieldy as possible. It’s the stifling and flattening logic of bureaucracy applied to the art of food and drink service.
This is all the more infuriating because Act 39 instituted direct delivery of such orders, bypassing PLCB warehouses, seven years ago. But the bureaucracy used a tendentious reading of the law to delay implementation — and still charges all the same fees even when bottles are delivered directly to clients. It’s a racket that can only exist because it’s a state-enforced monopoly.
And it doesn’t make sense. There’s hardly anything Gov. Josh Shapiro could do that would be more popular than ending this insanity. Offering to consider further privatization of that inefficient and exploitative bureaucracy could help to break the current budget stalemate in Harrisburg.
— Pittsburgh Post-Gazette via AP
