March 16, 2015

Time to do away with minimum-pricing law

Small package store owners flocked to the State Capitol last week protesting Gov. Dannel P. Malloy's plan to extend liquor store hours and undercut arbitrary minimum-pricing laws.

While we feel for these small businesses that face increasing economic pressures, they are fighting a losing battle.

In the 21st century, it's tough to argue in favor of Connecticut's arcane liquor laws. Minimum pricing is anticompetitive and smacks in the face of free-market capitalism. The law, which has been on the books in various forms for decades, artificially sets liquor prices by prohibiting retailers from selling a bottle of alcohol below cost. The cost is equal to the wholesale bottle price plus shipping and delivery charges.

Minimum pricing does little more than increase the cost of alcohol and protect small package stores by ensuring they can keep their prices more competitive with larger retailers.

In written testimony to the Finance, Revenue, and Bonding Committee last week, Edward Cooper, vice president of public affairs and community relations for Total Wine & More, which has a location in Norwalk, said the state's minimum-pricing law tacks on up to $8 more on 1.75-liter bottles of alcohol.

We understand why small package stores are lobbying hard against changes to minimum-pricing laws and expanded hours, which they argue only adds to their costs without generating significantly more revenue. They are fighting for their survival, and if large alcohol retailers, including supermarkets, can offer price discounts or charge whatever they like, it will be harder for small package stores to compete. Large retailers, package store owners argue, will undercut their prices, like they do on other items, simply to get customers in the door.

That may happen, but that's how the free market economy works. The onus will be on package store owners to rethink their business model and adapt. That is what businesses in most other U.S. industries are required to do in this age of constant change and technological advances.

The one area where package store owners have a legitimate gripe is their complaints that Connecticut's excise and sales tax makes them less competitive with liquor stores in nearby states. That may be true, but at least all Connecticut alcohol retailers must pay the same tax rate, making it an even playing field.

Trying to advocate for lower tax rates in the current fiscal climate is a lost cause (in fact, part of Malloy's liquor law reforms aim to raise additional tax revenue — about $3.3 million — to help close a projected $1.3 billion deficit next fiscal year).

To be clear, higher costs created by minimum pricing don't break the piggy banks of most Connecticut consumers. That is not the main issue here.

We aren't advocating for big business over the little guy either. We know the important role both play in the economy.

The debate ultimately comes down to whether or not state government should protect one class of businesses over another. We side with letting the market decide the price of goods and services, rather than state government.

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