Can States Raise Revenue by Reforming Alcohol Regs?

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In many cases, states that are facing budget shortfalls target booze to raise revenue, oftentimes through increased alcohol taxes. But Patrick Gleason writes for Forbes about how some states have raised tax revenue from alcohol not through tax raises but by de-regulating the industry:

"In excess of 30 states reported budget shortfalls at the beginning of 2017. To balance budgets, some states have reduced spending and some have raised taxes. The most innovative lawmakers, however, are finding they can increase tax collections without raising taxes by removing unnecessary barriers to the sale of alcohol.

State and local governments from coast to coast impose a host of restrictions on the sale of beer, wine, and spirits . Most are unjustified relics. Too often, the motivation to put and keep many of these restrictions in place has nothing to do with public health or safety concerns. Instead the ultimate purpose is to protect politically well-connected stakeholders from competition. In the process, these protectionist regulations also inhibit industry expansion and economic growth.

Take South Carolina, where earlier this year state lawmakers enacted legislation that will remove restrictions on craft distillers’ ability to sell their product. This reform, which was signed into law in May, allows craft distillers to mix cocktails for customers visiting their tasting rooms and to serve up to three ounces of liquor, which equates to approximately two drinks.

Before passage of this law, craft distillers in South Carolina were only allowed to serve up to 1.5 ounces per customer in their tasting rooms, which is basically a shot. Further inhibiting their ability to sell and market their products, spirits served on-site had to be consumed straight and could not be mixed as cocktail...

Additionally, South Carolina distillers previously were only allowed to sell 750-mililiter bottles for off-site consumption, a quantity commonly referred to as a “fifth.” Under the new law passed this year, craft distillers will now be able to sell smaller sized bottles, such as mini-bottles and pints, for off-site consumption.

By lifting statutory and regulatory shackles that serve no purpose, these new rules for South Carolina distillers will allow them to increase sales and grow their businesses, which will translate into more tax revenue for state and local coffers..."

The whole article is worth a read here.