OLYMPIA – Washington’s liquor taxes will drop this summer after lawmakers allowed a surcharge of 42 cents per liter to expire. They also agreed to more than double the number of state-run liquor stores allowed to open their doors on Sunday afternoons.
During the current two-year state budget period, which ends June 30, lawmakers had authorized a surcharge on hard liquor as part of a revenue package to help fill a $1.8 billion budget gap.
Lawmakers didn’t mention it when they listed tax relief bills that passed this session, but budget writers quietly allowed the temporary tax to expire, effective July 1. It would have taken a new budget provision or a separate bill to keep the tax going another two years or to make it permanent.
The tax charge of 42 cents a liter raised about $19 million in the past two years, according to the Senate Ways and Means Committee.
The Distilled Spirits Council of the United States said the Legislature’s decision “will help reduce Washington’s current burdensome excise tax rate from $21.30 per gallon to $19.39 per gallon.”
David Wojnar, the council’s vice president for state government relations, said Washington still will have the highest tax and markup rate in the country, with about 60 percent of the purchase price being the state’s tax and markup. The average state with a state-run liquor monopoly has taxes of $9.59 per gallon, he said. A 16 percent federal tax is also applied.
A sample “where your liquor dollars go” chart on the state Liquor Control Board’s Web site says a $13.65 bottle of booze includes $3.48 in the distillery price, $2.14 in federal taxes, $4.67 in state liter and sales taxes, and $3.36 in state markup.
The state liquor stores sent about $300 million in taxes and markup dollars to the state treasury and to cities and counties in the last fiscal year.
“Reducing the tax burden on adult consumers, while giving them modern conveniences, such as the opportunity to shop for spirits on Sundays, ultimately helps create jobs and add funds to the state treasury,” Wojnar said.
The new budget for the coming two years also includes a proposal by Senate budget Chairwoman Margarita Prentice to allow 29 more state-run liquor stores to open their doors from noon to 5 p.m. on Sundays.
Two years ago, for the first time since Prohibition ended and state “blue laws” forbade sales on Sunday, the Legislature authorized 20 state-run stores plus contract stores run by private vendors to open on Sundays.
The experiment was a big hit, with sales exceeding expectations and causing no apparent problems or falloff of sales on other days, the liquor board told the Legislature this winter. The original Sunday sales estimate was $10 million by July 1. Actual sales are expected to top $15 million.
The state has 161 state-run stores and 158 contract stores run by the private sector, typically in rural areas. The board, which also licenses more than 14,000 drinking establishments, chose 20 high-traffic stores for Sunday sales and 38 of the contract stores opted in.
Prentice and her House counterpart, Rep. Helen Sommers, D-Seattle, agreed to allow another 29 stores to offer Sunday sales, starting no later than September. Board spokeswoman Susan Reams said the board has a tentative list and will announce the final selection and the opening date later.
The new budget includes $3.9 million to cover the extra cost, which will be more than repaid in extra revenue generated. The board was directed to report back to the Legislature in 2009 on the effect the extra hours have on overall sales.
Prentice said part of the extra revenue, about $1 million a year, will be earmarked for the courts to provide interpreter services and to assist the Municipal Council with research for ports and special purpose districts.
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