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Originally published January 6, 2014 at 4:53 PM | Page modified January 6, 2014 at 5:37 PM

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Guest: How privatization drove up the cost of liquor

State taxes and fees on spirits have skyrocketed to more than five times the national average, writes guest columnist Steven Stone.

Special to The Times

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WHEN Washington voters approved the privatization of liquor sales in November 2011, they did so with the promise of lower prices and higher revenue. Instead, they got sticker shock at the checkout counter while the state got a $200 million windfall at their expense.

Before privatization went into effect, the people of Washington were already paying the highest spirit taxes in the country. Now, state taxes and fees on spirits have skyrocketed to more than five times the national average.

Washington’s independent spirits retailers and craft distilleries, small-business engines of our economy, are being squeezed out of the market by this unreasonable tax structure.

Meanwhile, it has been a boon for the state’s coffers. In the first year of privatization, the state of Washington generated more than $500 million in taxes and fees from distilled spirits — $200 million more than it needs to recoup its losses from closing state liquor stores. All this new revenue has come on the backs of consumers.

Prices are so high that Washington residents are pouring over the border to stores in other states in search of fairer costs, according to news reports from Idaho and Oregon. This is all occurring as businesses in our own state struggle to survive; more and more shut their doors for good every day. Washington residents and small businesses deserve better.

Right now, Washington consumers pay an astounding 20.5 percent sales tax on all spirits purchases, while most other goods in Washington are taxed at 6.5 percent. That means a consumer is paying nearly $5 more in sales tax on a $30 spirits purchase, in addition to the confusing array of other costly taxes applied to a bottle of spirits. This is sending residents to find better deals in other states.

Consumers and businesses in Washington deserve a tax structure that allows them to pay a price more in line with what consumers in the other 49 states pay.

Legislation governing liquor sales taxes should be fair to Washington consumers and guarantee a revenue-neutral impact on the state.

The good news is we have a chance to fix this problem. A group of consumers and community businesses have come together to form the Washington Good Spirits Council. We are working with stakeholders across the state to find a comprehensive policy solution that would lower taxes on consumers and businesses, while keeping intact the vital services that our cities and state provide.

The best, most effective way to accomplish our shared goals is through a reduction in the sales tax on distilled spirits. Reforming our state’s excessive sales tax would keep money in the pocketbooks of consumers, allow local businesses to thrive, create jobs and generate the revenue Washington needs. It would encourage customers to stay in state rather than cross borders for more reasonable prices.

At a time when the statewide economy continues to struggle, we should take action to help consumers stretch their budgets further and keep liquor sales in the state.

Alleviate the unnecessary weight that’s been placed on the shoulders of consumers and community businesses. Reducing the spirits sales tax to bring it more in line with what consumers pay for all other goods would help taxpayers, businesses and the government.

Steven Stone is founder and head distiller at Sound Spirits, a craft distillery in Seattle. He is also an engineer for Boeing.

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