Privatizing Utah’s alcohol control system will reduce your taxes and increase your freedom.

While some progress has been made with Utah’s strange and often incomprehensible liquor laws, they remain absurdly complex and anti-business at their core.  High prices and poor selection in the state-operated stores drive a huge percentage of business, statewide, to out of state sellers – some estimates are that as much as 50% – half – of all alcohol consumed in Utah is purchased outside the state’s borders. We need a sane and rational solution that brings those sales back into the state where we will receive the normal sales tax on them, not have it go to our neighboring states.

Government runs the alcohol business ineptly – did you know a recent audit revealed that in the preceding five years the DABC had LOST nearly $2 million dollars worth of alcohol?  It remains unaccounted for, and no one admits to having any idea what happened to it.

The answer is simple: privatization.

Step 1: Abolish restaurant quotas. The simple fact is that if you want to open a restaurant with a license to sell mixed drinks, you already have to get approval from your local city council. City government is far more qualified to decide what is appropriate for their city than any unelected board far away in the state capital can ever be. The DABC’s role in quotas is completely unnecessary – which means we should stop paying them to perform it. The unnecessary quotas stifle competition and consumer choice, and that means lost jobs. If restaurant quotas were lifted, based on statements made by people who have expressed their desire to open restaurants, in the next five years alone we would see 5,000 to 10,000 new permanent jobs, and hundreds of millions of dollars in new construction and remodeling. Leaving those on the table in the name of a completely arbitrary quota system is insane.

One other thing about quotas: we who live outside the Salt Lake Valley are unfairly disadvantaged by the current shortage of licenses. The bias for Salt Lake area businesses is clear.

Step 2: Privatize sales and distribution. Selling the properties – not just the stores, but the distribution warehouse and all the related vehicles and equipment – will provide a one-time cash infusion.  Getting the sales tax on all the currently lost sales will more than compensate for the state’s profits on the sales, much of which goes back into overhead – equipment, salaries, pensions, et al. The sale of annual retail licenses will also contribute to replacing, and I believe exceeding, the current income levels, both for the state and for municipalities. Privately owned stores will be subject to normal business property taxes, which state owned stores do not pay. The free market will make sure that stores stock what people actually want to buy, and will price it competitively.  Much of Utah is of course rural, and allowing small local grocery stores to benefit from the profits from liquor sales will strengthen those businesses and allow them to serve their communities better, with better selections, longer hours, and more employees.

At the same time we will remove several hundred workers from the state payroll and place them onto private payrolls, where free market principles will see that they properly reap the rewards of their labors.  Merit increases would (and should) be the product of production, not simple tenure – which is the case for state government employees.

It is my calculation that the additional revenues that would result from these changes would be enough to allow us to abolish the current sales tax on unprepared food, resulting in a tax decrease of $300-400 annually for the typical Utah household.

Some people will express concern about sales of alcohol to minors: the truth is that private enterprise is a far better buttress against these sales than the state stores can ever be. If a clerk at a state store sells to a minor, he or she can lose their job.  If a privately owned business sells to a minor, they risk their profits, and indeed their entire ability to operate the business.  Losing your livelihood is a BIG incentive to follow the law.

The government has NO BUSINESS controlling the sales and distribution of any commodity as a monopoly.  And like far too many government agencies, Utah runs the liquor business in the most inept manner possible. Choose freedom, and treat adults as adults.

 

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