In Minnesota city-owned municipal liquor stores help some cities cover their expenses. These stores emerged mostly in communities that wanted to control liquor sales after the repeal of Prohibition.
Not everyone agrees that cities should be in the booze business, many disagree because it is a service the private sector handles quite effectively, which is true.
Municipal liquor stores outgrew their intended purpose long ago. It didn’t take long for cities to learn that they would have to operate essentially as private business — maintain competitive hours, sell popular products, compete on price — if they were to keep these stores from being a huge drain on city budgets. This became especially true as population densities increased and transportation became uncomplicated. A good citizen could go down the road or highway and get what he wants.
Today, however, cities increasingly look at these stores as revenue generators, although a surprising number of cities still lose money and keep their stores open.
Operating a business like a liquor store seems like another sloppy way to pay the bills. One could also argue that it is — the word is loaded — unfair.
A tax is a levy charged to citizen to cover public expenditures. A taxes and fees are not the same, something our previous Minnesota governor, Tim Pawlenty, could not grasp. Taxes are not voluntary.
A fee would be purpose-specific, such as tuition for school or admission to a public swimming pool. Fees are specific to an intended service or facility. Fees voluntary.
The problem with liquor stores to pay for general expenditures is the way it blurs the tax-fee line. The money raised by liquor sales is voluntary, but booze really isn’t a public service. The money raised goes into a fund that covers schools, police, and infrastructure.
When Governor Pawlenty tried to argue that he didn’t raise taxes when he approved an increase in cigarette taxes he argued that he was raising a fee. But the money raised did not go to cover the cost of cigarettes, it covered things like money borrowed from the state’s budget for schools.
It is better to see more cities making money rather than losing it the anachronistic municipal liquor store programs, but they survive because we simply fail to understand and accept the simple purpose of taxes. We don’t need these gimmicks. A better — and by far more fair — way to fund government is by consistent and balanced tax policy.
One might think that I am making a mountain out of a mole hill, but look at the trend across the country. We are finding more ways, not less, to fund through public-owned enterprise rather than tax. Public gambling being the most obvious.
And do you see a pattern here? Cigarettes, liquor, gambling. Should government be in the business of vice?
Just pay the damn taxes.