In conservative New Hampshire we have no income tax. Instead, the state pays for its services with lottery tickets, cigarette taxes, highway tolls, exorbitant property taxes, and myriad other (mostly regressive) levies. Here, the state runs and manages all liquor and wine sales, and we're infamous nationwide for having state liquor stores at highway rest areas. Go figure.
Independent wine merchants have always been at the mercy of the state, having to buy all goods through the state warehouse (which, we understand, is not climate controlled despite seasonal lows in the -30s and highs in the 90s). Smaller independent merchants pay 80% of the retail price for wine, yielding them a respectable (and sustainable) margin of 20%.
In recent weeks, to address an anticipated $180 million state budget shortfall, the governor has decided to slash this 20% independent wine merchant discount. Starting in the summer of 2008, merchants would receive a discount at the discretion of the state liquor commissioner, head of this monopoly enterprise. Most will get only a 10% discount. State liquor stores, of course, will not be affected by this new policy. Read about this issue in the Nashua Telegraph.
The net effect will be devastating for independent wine merchants and even chain grocery stores. They will now have to mark up their wines 10% over the price that the local state store will charge for the same bottle of wine.
At our local food coop, wine manager Dan King is justifiably outraged, and has written to local legislators to no effect. New Hampshire runs a State Liquor Store right next door to our coop in the same shopping plaza, and Dan anticipates huge backlash when customers start noticing his wines are priced higher. His only hope is to continue to offer the value-added of expert advice, better selection, and grocery-store convenience. It's something Dan's always done well. But I'm a member of that coop. I own it. I worry.
This is really bad public policy. What’s worse is that the margin cut is not across the board, but at the discretion of the Liquor Commissioner. That is, one person can decide, store by store, whether the store profit margin is 20% or 10%.
Luckily this power runs out in July 2009, and between now and then we can lobby hard for change.
Someday NH will tax its residents in a sane way. Maybe even before I move to VT….