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State Senate panel OKs bigger discount for bar owners
Wednesday, April 02, 2008

Yesterday brought a dram of good news for Allegheny County bar and tavern owners.

The state Senate's Law and Justice Committee has approved a bill that would increase to 16 percent the discount that licensees receive when buying wine and spirits from Pennsylvania's state stores. Moving a bill out of committee does not ensure passage into law, however; the bill still must be approved by the full Senate, the state House and the governor.

Currently the discount is 10 percent. The extra percentage discount would result in an estimated $25 million in savings for bar and restaurant owners statewide, according to the bill's sponsors, Sens. Sean Logan, D-Monroeville, and John Rafferty, R-Montgomery. It also would mean less money for the Pennsylvania Liquor Control Board and, by extension, less for the state.

Although the extra discount would apply to all of the state's tavern and restaurant owners, those in Allegheny County hope the savings will at least partially offset the hit they took when county council and Chief Executive Dan Onorato approved a 10 percent drink tax for the Port Authority transit system and other expenses. The drink tax has been in place since Jan. 1.

While the timing is fortuitous for bar and restaurant owners in Allegheny County, Mr. Logan said the discount "has absolutely nothing to do with the county implementing the 10 percent drink tax," and that he likely would have pursued the extra discount independent of the Allegheny County tax.

His main motivation in increasing the business discount to 16 percent, he said, was historical -- that's what the discount once was, decades ago, until a series of laws slowly whittled the bulk discount from 16.67 percent down to 7 percent.

In 2005, the state bumped the discount up to 10 percent, but groups such as the Pennsylvania Restaurant Association say the discount should be in the neighborhood of 18 percent to offset the many state taxes bar and restaurant owners pay on wine and spirits.

Technically, the discount is not on the cost of the bottle, but on the tax -- alcohol sold in Pennsylvania is taxed at nearly 25 percent. A $20 bottle of vodka, including the state's "bottle charge," is assessed the 18 percent Johnstown Flood Tax, plus a 6 or 7 percent sales tax (7 percent in Allegheny and Philadelphia counties), meaning a consumer here pays $5 in taxes, for a total of $25 or so. Retailers then get a 10 percent discount from that final taxed price, meaning they'd pay $22.80 for the same bottle.

Bill Toland can be reached at btoland@post-gazette.com or 412-263-2625.
First published on April 2, 2008 at 12:00 am
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