A recent article in the StarNews looks at how taxes and an inefficient government monopoly on spirits raise the price from $5.79 to $61.92 a case. The base price for a case (12 bottles per case) of Aristocrat Supreme 80 proof vodka (North Carolina’s best selling liquor) is $5.79, a bit higher than the cost of an average mixed drink purchased at bars and restaurants.
Rather than have distillers ship orders to ABC stores, in the infinite wisdom of state regulators, spirits are instead shipped to an ABC warehouse. Local ABC stores must then contact the warehouse to place order. This unnecessary middle-man, along with the federal excise tax, raises the price from $5.79 a case to $32.91. Local ABC’s then add a 39% markup in order to “generate” profit, hiking the price to $45.74.
Then when state taxes, which legislators hiked substantially last year, and additional bailment surcharges are figured in, the price rises to $61.92. When a case arrives at the ABC store, an 8% sales tax (which is higher than the average of bordering states) and additional bottle charges sets the final price of a 50 cent bottle of Aristocrat to $5.67; more than 1,000% higher the original price.
This price gouging perpetrated by a government monopoly serves only to raise the price for consumers and line the pockets of bureaucrats. The ABC administration of New Hanover County is earning nearly $350,000 in annual salaries. The salary disparities have prompted investigation, with Governor Beverly Perdue saying all options are on the table for reforming the ABC system, including privatization. North Carolina is one of 19 states where liquor stores are government run.
The privatization of liquor sales will not only cut government waste, but will lower prices, increase selection, and generate more revenue. A detailed case for the privatization of spirits can be found here.