Free marketeers in the Commonwealth of Virginia waited with high hopes after Governor Bob McDonnell made the announcement that he planned to privatize state-run liquor stores in the state.
In the beginning, McDonnell’s rhetoric sounded good:
[I]t’s getting the government out of the business of alcohol distribution, which I don’t think it needs to be in. We’ve [sold] beer and wine [privately] for 70 years; we can certainly do distilled spirits” in the same way.
Unfortunately, it proved to be just that: rhetoric. It was pretty clear from the start that his ultimate motivation was the state budget’s bottom line. That fact was reinforced with the news that McDonnell’s privatization plan includes a bevy of new taxes on businesses:
4 percent tax on restaurants and bars… Included in the 4 percent is a 2.5 percent tax imposed solely on restaurants’ annual liquor receipts and a 1.5 percent tax imposed on restaurants and all stores that sell alcohol, including grocery stores…McDonnell’s proposal also includes other fees, including a $17.50-per-gallon excise tax and a 1 percent tax on gross receipts, both charged to wholesalers
While this increase in taxes speaks negatively toward McDonnell’s convictions, just as bad are his plans to limit the number of licenses available. Initially, Bob’s plan is to auction 1000 licenses to the highest bidders, but there’s no indication that more licenses will be available once those are all sold.
Licenses will be divided into three categories: big-box stores, such as grocery stores and Wal-Mart (600 licenses), package stores (150 licenses), and convenience stores and drug stores (250 licenses)
Though the committee was set to vote on the measure today, plans were postponed due to the fact that a completed proposal wasn’t made available to committee members. It seems we’ll have to wait until November to see how far McDonnell strays from his supposed free market ideals.