Oregon: the 2nd highest liquor taxes in America! Or are they?

Today we are going to look at Oregon, home of the Oregon Liquor Control Commission (OLCC), and generally considered to have the second-highest liquor taxes in the country behind Washington State. They are a control state for liquor sales, but wine sales are private business. This chart by The Tax Foundation shows the tax levels for 2016; Oregon appears to have a tax rate of 3.1 times that of Pennsylvania.

Wow. If we have high prices, the prices in Oregon must be astronomical, right? Let's compare some of the top selling liquors in the two states today, now that we have the additional wonder of variable pricing. Keep in mind, the PLCB's very own report on variable pricing says nothing about using price negotiation to benefit the citizens, only about how much more money they can take from us in "Revenue."

We're going to compare the prices for the top selling spirits in the PA State Stores from 2017 (Fiscal 2018 ended 3 months ago, but the new report still isn't out) to those same bottles from Oregon, using both state's website prices. We'll give you the OLCC price, and the PLCB's shelf price (and out the door price). We'll explain that shortly.

First on the list is Tito's Handmade Vodka. Oregon # 8488B is selling at $23.95. The PLCB has it as # 9359 and it is on sale this month for $17.99. ($19.07) Yay us!

2. Captain Morgan Spiced Rum: Item # 0475BB in Oregon, selling for $16.95. Here it is Item #8865 at $17.99 ($19.07).

3. Jack Daniel's No. 7: OLCC Item #0146B, which sells for $21.95 (on sale this month); or you can pay $25.99 ($27.55) for Item #4291 in the State Stores. Such a deal!

4. Fireball Cinnamon: Oregon item #0939B for $15.95 in plastic, or $17.95 in glass. The PLCB equivalent, #4302, is on sale for $17.99 ($19.07). Even on sale they can't match the Oregon price. How much do you reckon they had to variably mark it up for that to happen?

5. Jameson Irish Whiskey: Item # 0391B for $29.95 in Oregon; or pay $29.99 ($31.79) for item #7303 in Pennsylvania.

6. Bacardi Superior Rum: Oregon #6179B is currently selling for $12.95. But it's on sale at the PLCB! Yeah! Item #7970 is on sale for $13.99 ($14.83). Wait...what?

7. Grey Goose Vodka: Oregon's #0636B at $35.95 compares to the PLCB's # 8963, selling for $32.99 ($34.97). Hey, we won one!

8. Crown Royal: Oregon's #0311B is going for $27.95 there; but #5186 is selling for $28.99 ($30.73) here. Screwed again.

That's the tale of the tape. Now we'll explain it.

Why did I include the out the door price for Pennsylvania, but not Oregon?  Because there are no extra or hidden taxes in honest Oregon. The price you see on the shelf is the price you pay: no hidden variable markup, storage fees, extra 1% 'just because' fees, and no sales tax dumped on top of the already taxed liquor. Kinda makes you wonder about the "negotiation" on those JD prices in Pennsylvania, doesn't it?

Remember that these are the largest selling 750s in Pennsylvania*. If there was any buying power leverage that could be used, it would be on these items. So what did that buying power get us? Jack went up a dollar, as did Fireball, Bacardi Superior and Crown Royal.

Looks like Oregon has pretty competitive prices even though their tax rate is THREE times as much. How is that possible? Hidden taxes, with the main one being product markup, the bloated PLCB "profit" that's being used mainly to pay for bloated PLCB operating costs. It used to be fixed at 30%, but now it is whatever they need it to be -- that's "variable" pricing! -- to pay off their burgeoning overhead, incompetent decision making, and of course to maybe pay some of the pension debt they owe. Need more money? Just vary the pricing! UPWARD!

You see, in Oregon they just have taxes, and it's transparently easy to find exactly what they are. From that they pay for the OLCC's costs. Here in Pennsylvania, we have the super-secret Variable Markup that no citizen is allowed to know, used to pay for the PLCB and whatever idiocy they come up with: wine kiosks, house brands, courtesy training, bad contracts, renaming stores for the 4th or 5th time...you get the idea.

Oregon's listed tax rate may be OVER 3 times that of Pennsylvania, but our secret taxes make them almost equal on many, many items. This is what we get with an "independent" agency with almost no oversight, no experienced business people in charge, and 80 years of cronyism and incompetence at every level. Is this the system that is best for the citizens? Are you sure we can't do better by having real business people run real businesses in competition with each other for the consumers' dollar? You know...just like you buy everything else?

Privatize - now more than ever.


* (Oregon does not carry the same bottom shelf vodka that the PLCB does, so that was left off the comparison.)

How PLCB buying power incompetence has cost you and me Billions

In my last post, PLCB "Buying Power" A Myth, (which you really should read first), I told you how for the past eighty-plus years the PLCB's incompetence in not negotiating or even trying to negotiate the best prices for Pennsylvania liquor prisoners should damn them for all eternity to the lowest circle of Hell, the one Dante reserved for people who betray those whom they should serve.

As always, we are going to provide some numbers to show what they've cost you. I'm going to use the largest selling whiskey in the state as an example, the standard 750 ml Jack Daniel's Old Number 7. (I thought I would use that because when the PLCB reads this (and they do), it might reinforce how to spell Jack Daniel's correctly, since they seem to have a problem with that.)

We are going to compare Pennsylvania prices with the state that has the 2nd highest liquor taxes in the country — Oregon, also a control state with uniform prices — and see who at least attempts to take care of their customers: the PLCB or the OLCC.

From the PLCB we know that (non-negotiated) cost +30% markup (required by law) + handling fee  (arbitrary) + 18% Johnstown Flood Tax (levied on the price) + rounding up (always up!) to nearest .49 or .99 (just because) = Retail Price. In this case, our bottle of JD has an initial cost of  $14.46. so putting that into our formula we come up with $14.46 + 30% ($4.34) + Handling fee ($1.20) + Flood Tax ($3.60) + Roundup ($.39) = Retail Price of $23.99.

Oregon doesn't give us their unit price so we have to work backwards from the retail price to figure out approximately what their cost price is. Oregon works on cost + 79.8% markup + $1.40 Handling fee + $.50 per bottle surcharge + roundup (to nearest .05). Oregon's shelf price for a 750 ml bottle of Jack Daniel's Number 7 is $24.95 or about $1 more than PA. Taking that $24.95 and working the formula backwards we subtract the roundup (which we'll call zero, because the price is already at $X.95, and we don't really know, except that it's not much). Next we subtract the surcharge of $.50, which gives us $24.45. Then we take out the handling fee of $1.40 to leave us with $23.05.  Taking out the 79.8% markup ($23.05/1.798) ends up with a cost price of $12.82 at most (it's unsure because of the unknown roundup, but it's less than a dime difference). Remember: PA is paying $14.46.

Hey, but Oregonians still pay more on the shelf, so Ha-ha! Only...how much is the PLCB's "non-negotiable" system of costing and pricing costing you, when you compare it to the unit price the OLCC is getting? Easy enough to find out. Put Oregon's cost into the PA formula. $12.82 +30% = $16.67; adding $1.20 gives you $17.87; drown it in the 18% Flood Tax, and that brings it to $21.08, then add the roundup…and you end up with $21.49, a $2.50 savings ON EACH BOTTLE, if only the PLCB did their job. PLCB incompetence in business cost PA consumers over $6.1 Million extra on Jack Daniel's alone last year.

You're getting screwed out of $2.50 every time you buy a bottle of Jack — remember, that's only one example — because the PLCB can't be bothered (or doesn't know how) to use their "massive volume leverage" to get the same price little Oregon does. Multiply that by how many millions of bottles they've sold since 1934, and that is how much they have cost the consumers of the state. An amount you have been paying extra for all these years because of PLCB ineptitude, laziness, and their "we don't give a shit, we're a monopoly" attitude. Far more than any so-called "profits" they have ever turned in.

Remember: this isn't a tax that's being levied on you that's going to benefit the Commonwealth, it's not a fee you're paying to the PLCB to pay for alcohol enforcement, it's not "profit" that gets sent to the general fund whether it's real or just hidden pension funds...it's money the PLCB doesn't know how to get from distillers, vintners, and importers. It's gone to line their pockets, exactly the people who the PLCB apologists rant and rave that privatization will somehow steal all your money to pay. Too late: they've already got it, had it for decades, thanks to the PLCB.

Is this the system you want to keep or do you want them to "modernize"? Because "modernization" and "flexible pricing" will just cost you more by statute instead of by PLCB incompetence; the only difference will be that the PLCB will waste the money on Increased Operating Costs to fuel the Boondoggle Machine. I say we privatize and let business people run businesses and end the PLCB screwing of the public.