(Updated 4:48 p.m.) Lawmakers on the General Law Committee seemed more inclined to blame taxes for Connecticut’s high alcohol prices Tuesday than the state’s unusual minimum bottle pricing requirements.
The committee held a public hearing on legislation to alter the state’s minimum liquor pricing law. It’s the second attempt to change the statute by Gov. Dannel P. Malloy’s administration.
Currently the minimum price a package store can charge for a bottle of alcohol is a wholesaler-established and posted “bottle price.” In Connecticut, this keeps alcohol prices at smaller liquor stores in line with larger stores, who otherwise may be able to sell at wholesale discounts.
Malloy has argued that the law causes consumers to pay more for alcohol in Connecticut than in surrounding states. For the past two years the governor has proposed allowing retailers to sell alcohol at the price they purchased it. Last year he introduced it as part of a broad package of alcohol sale legislation, which legalized the sale of liquor on Sundays.
But the General Law Committee scrapped the minimum pricing proposal after hearing from hundreds of small package store owners. This year, the governor reintroduced the measure as a stand alone bill.
On Tuesday, William Rubenstein, Malloy’s consumer protection commissioner, made the governor’s case before a hearing room packed with package store owners. He said Connecticut’s minimum pricing law was unlike laws in other states and it causes consumers to pay more.
“If somebody wants a bottle of Jack Daniels, they shouldn’t have to pay $8 more in the state of Connecticut because there’s an arbitrary floor that’s not related to [the liquor store’s] cost,” he said.
But soon after Rubenstein finished his prepared testimony, lawmakers on both sides of the aisle started suggesting the rate consumers were paying had more to do with taxes than posted pricing.
Liquor store owners applauded Sen. Kevin Witkos, the committee’s ranking Republican, when he blamed the amount of taxes levied on the industry.
“That’s where the real savings can be seen . . . and reduce the costs to consumers,” he said.
Rep. Daniel Rovero, D-Dayville, agreed, saying Connecticut stores will never be able to compete so long as the state has a sales tax on alcohol and Massachusetts does not. He said Connecticut residents often go north to buy alcohol, gasoline, and clothing because of the taxes here.
Rovero said that before the state tries to “put every package store out of business,” it should make its tax rates competitive with nearby states.
“Because we can do anything we want, we can cut the price down, take away the wholesale price, we can make it the wild, wild west as far as booze goes, and we’re not going to accomplish what we want to until we get competitive with our taxes,” he said.
However, Revenue Services Commissioner Kevin Sullivan said the administration wants to address minimum pricing before it makes changes to the state’s alcohol tax rates. He said the fixed price was a subsidy to the alcohol market, which raised prices on consumers.
“I’m not going to sit here and tell you that taxes are not a factor,” he said.
Sullivan was a member of a task force that studied liquor pricing last year. He said everyone in that group would acknowledge that taxes play a role in the high price of liquor.
“I think what we would also acknowledge is there is room for a conversation in the future about that issue, once we get a handle on fair pricing in the state of Connecticut,” he said.
Until that time, reducing the tax would only subsidize the sale of alcohol, rather than help alcohol consumers, he said.
Malloy defended the proposal after an unrelated public event Tuesday. He said he thinks it’s an important issue.
“The alcohol industry like every other retail industry should be run for the benefit of the consumers, and we have outpriced ourselves, so we’re forcing ourselves to lose substantial amounts of sales to other states in a way that we allow people to fix prices,” Malloy said. “We don’t allow people to fix prices in other inudstries. It doesn’t make any sense.”