Sunday, August 23, 2009

Another Dubious Achievement for Illinois.

I've been meaning to write something about liquor taxes, especially since Illinois (where I live) has decided to lead the nation in yet another dubious capacity, this time with the highest liquor taxes.

Instead of writing about it myself, I'll refer you to this excellent piece by Sonja Kassebaum who is, among other things, a small distiller here in the Chicago area.

As Kassebaum points out, higher liquor taxes take a toll on the hospitality industry: bars, restaurants, and the people they employ. I've also read an analysis that shows how, because liquor taxes are so high already, higher taxes that supress demand can actually be counter-productive, in that if the higher rates are offset by weaker sales, tax revenues can actually decline.

But that's for another day.

3 comments:

ratcheer said...

Congratulations, Chuck! You have gotten a firm grasp on the basic principle of Reaganomics.

GoingLikeSixty.com said...

You forgot to mention the price increase that the distillers will take at the same time.

They will increase profit margins and lawmakers will get the blame.

Distillers reward lawmakers with nice PAC contributions.

~Sonja~ said...

Actually, as far as I know the small distillers are not increasing prices, and I'm not sure all of the big ones are either. No one in the industry is happy about this.

The tax increase is assessed at the manufacturer level, though, so with the state-mandated three tier system, the distributor and retail markups will be applied. So $.81 in tax translates to $2 in increases on the shelf for a 750 ml.