Washington taxes hit small liquor stores hard

SPOKANE — Competition from big-box stores and grocery chains that offer cheaper booze has 22 small liquor stores in Washington in danger of losing their licenses because they have fallen behind in paying taxes and fees, a newspaper said Monday.

Owners of the troubled stores said they have difficulty competing with bigger stores that are better able to spread the taxes and fees among other items, The Spokesman-Review reported Monday.

The situation developed after Washington state voters approved Initiative 1183 in 2011, allowing sales outside state-operated liquor stores. As part of the change, the state imposed new fees on spirits to make up for its millions of dollars in lost revenue.

The owners of Colville Liquor &Wine and Deer Park Liquor &Wine say they’re behind in payments of a new 17 percent licensing fee on all liquor sales. That fee is on top of the 10 percent excise tax added to those sales.

Both owners say they have a hard time competing against chain stores that can spread those taxes and fees to other products and offer lower prices for liquor. In addition, bigger retailers get discounts from liquor distributors for bulk purchases that aren’t available to small stores.

Linda Thrasher, the Deer Park owner, said she owes about $14,000 to the Department of Revenue for unpaid sales taxes, plus another $10,000 to the state Liquor Control Board for the 17 percent surcharge.

Aditi Sood, co-owner of Colville Liquor &Wine, didn’t disclose the amount owed to the state but said it was significant.

Both face a Dec. 31 deadline to pay the delinquent taxes or potentially lose their license to sell spirits.

State law doesn’t require a retailer to add the 17 percent fee to the shelf price, said Chris Marr, a Washington State Liquor Control Board commissioner.

“Are some big-box stores not adding the 17 percent, using those items as loss leaders? I’ve heard that it’s happening,” Marr said.

Sood and Thrasher said they see competitors selling alcohol to the public at wholesale prices.

Of the 22 stores currently facing suspension, most are in Western Washington. Four are in the Yakima area and one is in East Wenatchee.

Thrasher and other small liquor store operators have begun pushing for changes in the new state law.

They want the Legislature to reduce or eliminate the 17 percent retail fee, and end the practice of distributors charging different prices to retailers based on the amount of alcohol ordered.

Some of those concerns will be discussed on Nov. 22 when the House Government Accountability and Oversight Committee has a hearing in Olympia on the impacts of the law on small retailers.

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