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Washington State Liquor Taxes

Today is a marvelous day in the state of Washington. The state no longer controls liquor distribution. That means that we can now buy liquor in grocery stores, Costco, etc. I’m not going to get into the drama surrounding vote last year (yes, I voted for it), but I do want to explain the taxes you’ll see on your bill.

We’ll use a bill from the delicious Woodinville Whiskey Company as an example. At the bottom it mentions the following taxes:

  1. $13.50/gallon federal excise liquor tax
  2. $3.77/liter WA liquor tax
  3. $20.5% WA liquor tax
  4. 17% WA retail fee (mandated by I-1183)

Lines 1 through 3 are taxes that you were paying under the old system too. They continue unchanged now. But what about line 4? I thought 1183 was supposed to give me cheaper booze?

It will. What isn’t listed mentioned on the receipt is that the 50-65% markup that Washington used to build into liquor prices is now gone. Instead retailers have to pay a 17% fee on every dollar of liquor they sell so obviously most retailers will pass this cost directly to customers though you might not always see it itemized on your bill. Now that we have a mostly free market system, we can expect to see less of a markup on liquor as businesses compete for your dollars.

We’re still paying a ton of money to Washington and Uncle Sam but at least I can buy rum with my tater tots at Safeway!

[UPDATE] It looks like the Washington State Liquor Board tried to lock down their price list site, but they didn’t do a very good job. I was able to snag the full the full price list in an Excel file so that you can do your own comparisons. It’s still unclear to me how many taxes are included in the price listed on shelves now and how many will be added at checkout. Time to experiment!

Comments

# re: Washington State Liquor Taxes

So, did you carry that receipt around in your pocket for a week and then run it through the washer, or does the store honor the spirit of the Everygreen State by printing on recycled trash?

Monday, June 04, 2012 5:00 AM by Dudley

# re: WA Liquor retail pricing

People are getting confused and sometimes very cranky when they find the actual cost of a bottle of liquor as opposed to the shelf price. Retailers should be required to post the total price on the product, shelf, and/or in advertising.

Saturday, June 09, 2012 10:04 PM by Ray

# re: Washington State Liquor Taxes

I live in Montana but have been coming to Wash for the last 15 years to bird watch. Just had a drink at the local bar and almost threw up when I got my bill. I asked the waitress if I bought a round for the bar and she informed me that taxes went up. I later found out that Wash now has the highest in the nation!! Congrats . . . you are #1.

I am cutting my visit short and this is the last year I visit Wash. I'll just spend my money in Montana, and go to Glacier Park to see the Eagles.

Tuesday, June 12, 2012 6:36 AM by Cris

# re: Washington State Liquor Taxes

We've had the highest liquor taxes for quite a while. That didn't change because of this bill. Here's a report from 2010: taxfoundation.org/.../state-sales-gasoline-cigarette-and-alcohol-tax-rates-state-2000-2010

The bill was about getting government out of the business of selling liquor, not necessarily about making it cheaper.

Tuesday, June 12, 2012 6:51 AM by BenM

# re: Washington State Liquor Taxes

So, if I'm reading this correctly, paying all those taxes on a theoretical quart bottle of liquor, I'd be paying 1.$3.375 + 2.$3.00 (roughly- do we pay both the per gallon AND per liter tax?)+  3.$2.05 + 4. $1.70.

That all adds up to $10.13 which is more than the original $10 bottle. Something's not right.

Jenn976

Edmonds, WA

Thursday, June 14, 2012 3:43 PM by jenn976

# re: Washington State Liquor Taxes

Agreed Jenn, and that's something to bring up with our lawmakers. The good news is that the total price of liquor is now lower than it was so we've gotten rid of some of the markup. We don't truly have a free market in play yet because of the rule that it can only be sold in stores with 10,000 square feet of retail space, but we're getting closer.

And as for all the taxes listed on the receipt, it's always good if people understand the taxes they pay. Look how much people are riled up about this but over the course of the year, a 0.1% sales tax hike will cost you a lot more. I don't see a lot of people talking about that in the checkout line. We do have a high sales tax and this high liquor tax, but we have no state income tax. While the link I posted in a previous comment shows that in 2010 we had (by far) the highest liquor prices in the country, who knows what our overall state tax situation is. That would be an interesting report: for the average person living in each state, how much of their total income ends up going to the state each year? There are so many variables! That being said, I'd vote for a reduction in state liquor taxes if it came up as I think there's a lot of spending that we can cut out of Olympia.

Thursday, June 14, 2012 4:27 PM by BenM

# re: Washington State Liquor Taxes

Here's a breakdown of the state taxes, comparing WA and CA for the same bottle of Costco Bourbon. It does not include a breakdown of the federal taxes and because it's a private label, it doesn't show the impact of a distributor's markup. http://on.fb.me/LqgsQJ

Thursday, June 14, 2012 9:43 PM by Anthony

# re: Washington State Liquor Taxes

Posting the TOTAL price IS done is some stores.

Most CAN do it, for now they choose not to.

I AM writing my legislators to make that a mandatory requirement as it SHOULD BE !

Sunday, June 17, 2012 7:27 AM by Tim: vancouver

# re: Washington State Liquor Taxes

If you think the stores should post the full price, that's great, but why are you going to write to legislators? We just got rid of one unneeded government intrusion into business. Why are you going to replace it with another? Why wouldn't you just write directly to the business? I don't need a government to fix formats for price tags.

Monday, June 18, 2012 9:13 AM by BenM

# re: Washington State Liquor Taxes

@ben there are state imposed restrictions on how prices are listed.  there is an assumption that tax is NOT included and specific requirements for a sale to be considered tax is included.  under current law, the risk of the state deciding the requirements are not met is too great for most retailers situations.  read the WAC  458-20-107 (apps.leg.wa.gov/.../default.aspx).  the state doesnt want us really thinking about how much tax we are paying.  

Friday, June 29, 2012 11:18 AM by Jake

# re: Washington State Liquor Taxes

Did the state account for the reduced costs of operating liqueur stores and having highly insured state workers disappear.  Seems like taxes should have gone down to stay cash neutral.  My guess is that they are pocketing extra $$$.  Time for another tea party.

Friday, July 13, 2012 1:40 PM by Tyson Pischel

# re: Washington State Liquor Taxes

The initiative was "tax neutral".  The taxes baked into a bottle are the same as before, and now private stores are adding their own profit margin.  If you didn't understand this is what would happen when the initiative was passed, then you are a sucker for the big corporations that are now making millions from your stupidity.

Thursday, July 26, 2012 10:28 AM by Scott

# re: Washington State Liquor Taxes

@Scott - I approved your comment but I'm not sure it's factually correct. The taxes on liquor now do not equal the taxes from before. If you can show me a current receipt and compare that to the Excel sheet I included in the post and show me it's the same then I'd be happy to be proven wrong.

And if the tax change was neutral but businesses are now marking up the prices even more, why have prices on lots of brands gone down?

So I'm not sure how your statements prove that any of us are suckers.

Thursday, July 26, 2012 12:32 PM by BenM