WASHINGTON, DC – A proposal in the State Budget to permit wine in grocery stores, designed to generate new revenue for the state, would in fact leave New York with much less revenue due to the loss of distilled spirits sales – according to a new economic analysis released by the Distilled Spirits Council of the United States.
The Council sent the report to the governor and key legislators in both the State House and Senate so they could better understand the implications of the plan.
“Allowing grocery stores to sell wine will simply take foot traffic out of package stores – drastically reducing spirits tax revenues for the state,” said David Ozgo, chief economist for the Distilled Spirits Council and author of the analysis. “If consumers increasingly substitute wine for spirits, New York will end up actually losing more in tax revenues than it’s expected to gain,” he added, citing the considerably higher tax rate applied to spirits.
Further, Ozgo noted, each time a package store loses a distilled spirits sale, the state will lose 47% of its tax revenue because of the higher tax rate of spirits. The report also found that a massive reduction in spirits sales would force approximately 560 package store owners to close their doors.
“This report plainly shows that the proposal to allow wine in grocery stores doesn’t raise the revenue that was projected,” Ozgo added. “One has to ask, if it doesn’t raise the revenue and hurts small businesses by taking traffic out of package stores – what’s the point?”