Local Politics

Local ABC boards want bigger profit margin

Posted May 7, 2010
Updated May 8, 2010

— Lawmakers raised the excise tax on liquor last year by 20 percent to help balance the budget, but local liquor boards now complain that the move has dented their bottom lines.

In a March 29 letter to Jon Williams, chairman of the state Alcoholic Beverage Control Commission, the North Carolina Association of ABC Boards asked the state to allow them to raise their mark-ups on liquor sales from 39 percent to 41.5 percent.

Liquor store, ABC store, liquor generic Liquor stores say higher taxes hurt their profits

"With everything the way it is, times are tough, even for ABC boards that produce and generate a lot of revenue," said Mike Myrick, president of the state association and business manager for the Wayne County ABC Board.

Although the state runs the $700 million-a-year liquor sales system, local boards operate the retail stores.

Myrick said raising the excise tax from 25 to 30 percent of ABC store revenue has squeezed the profits of local boards. Nine of the 167 local boards are in the red, while many others are barely breaking even, he said.

"They're finding it tough to pay their bills, especially the smaller ones," he said.

Records show that ABC boards posted an average profit, after taxes and expenses, of 10 percent last year. Wake County ABC officials said their profits are up 3.5 percent so far this year.

Under the current system, a higher mark-up affects all ABC board statewide, whether or not they are in financial trouble.

"The big boards, my board, we don't need help right now," Myrick said.

The state ABC Commission adjusts liquor prices every three months, and Myrick acknowledged that the higher excise taxes affected profits for only two months after the taxes took effect last September. That has led to lower results for the fiscal year, which ends in June.

He said local boards hope their finances rebound in the 2010-11 fiscal year, which starts in July, but there are no guarantees.

Some opponents said a bigger mark-up isn't necessary for local ABC boards to survive. They blame greedy boards and poor management for financial troubles.

"Seems to me, (you ought to) close it down (and) replace who's on the local ABC commission to make it more efficient," said state Sen. Neal Hunt, R-Wake.

The last time the state raised the mark-up for the local boards was in November 2006, when it went from 38.2 to 39 percent. The last four increases have averaged 1 percentage point.

The state commission could consider the request for another mark-up next month, and if approved, it could take effect as early as August. Myrick said the change could increase the price of a bottle of liquor by 40 to 45 cents.

8 Comments

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  • saveforwork May 10, 3:35 p.m.

    HA! So because the state raised the excise tax 20% last year, fewer people made purchases. Now the local liquor Boards are sending a letter around to raise the mark-up another 2.5% so they can recoup lost profits. What kind of people are runnin' this show? Economics 101 would be a better investment.

  • whatelseisnew May 7, 7:57 p.m.

    Now isn't that interesting how taxes cut sales and thus hurt profit margins and tax revenue. Maybe there is a message in that for some of these idiots that just want to "find more revenue", instead of curbing their addiction to taxpayer money.

  • Eduardo1 May 7, 7:22 p.m.

    What a joke the ABC and the people who run the stores. Put it in the hands of private owners. The State can still have the same taX REVENUE. tHE ONLY DIFFERENCE would be competition in a free enterprise, known as capitalism
    I like the comments that tax man wrote

  • colliedave May 7, 7:14 p.m.

    With this level of mark-up, there is no way the gobberment will kill this cash cow and let the private sector take over. About the only way for this to happen is to elect enough pols who will force it to happen. But given the number of Batists in the state, this will never happen.

  • Tax Man May 7, 7:12 p.m.

    They need to privatize alcohol sales in NC - let the grocery stores, liquor stores, package stores, walmart, bjs, sams, costco sell booze and don't put any price controls on the sales. The state can charge a per bottle tax and they will end up making more money and the consumer will get better deals! Just get the state out of the booze market. Also let restaurants and bars buy from wholesalers and get better prices than the state currently offers.

  • discowhale May 7, 7:10 p.m.

    Imagine that. If you raise the price of a fifth by a fifth, the customer won't come forth!!

    Buy your liquor online, cheaper and a better selection.

  • turkeydance May 7, 7:03 p.m.

    a tax on taxes. next: gasoline sales.

    here's what i mean...the ABC price is at least 40% taxes.
    excise tax and the rest. on top of that, NC charges sales
    tax. so now, there's the possibility of of buying gas at
    $2.79 a gallon (which is 30% taxes) PLUS sales tax.
    it costs me $40 to fill up, add 7% sales tax: $43.
    it's the never-ending story.

  • CrewMax May 7, 7:01 p.m.

    Privatize