McDonnell Raises the Bar

Virginia governor wants new tax on bars and restaurants

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    NEWSLETTERS

    AP
    Republican gubernatorial candidate Bob McDonnell, listens to Republican National Chairman Michael Steele, not pictured, during a rally in Richmond, Va., Friday, Oct. 30, 2009. (AP Photo/Steve Helber)

    Grab that extra gin and tonic while you can – it could soon cost more in Virginia.

    Gov. Bob McDonnell is trying to finance his plan to privatize the Old Dominion’s liquor system. For 76 years, the state has had a monopoly on booze, and during his campaign last year, he pledged to end that.

    When Prohibition ended, 18 states opted to put liquor sales under government control. In Virginia, this has resulted in just 332 stores across its 42,774 square miles. (In D.C., there are more than 500 liquor vendors in 68.3 square miles.) If McDonnell gets his way, liquor would be available at stores like Wal-Mart and Costco, and at supermarkets.

    Retailers have been pushing for the change. McDonnell also says privatization would bring in quick cash needed to fix Virginia’s roads.

    But critics say that after the initial rush of cash that would come from selling off the stores, the state would lose up to $260 million per year that comes from government ownership. Since that money is currently dedicated mainly to schools and public safety, trading it for an investment in roads could meet resistance.

    So McDonnell is doing something anathema to conservative Republicans: He’s calling for a tax increase. McDonnell is proposing a 4 percent tax on bars and restaurants. The proposal “also includes other fees, including a $17.50-per-gallon excise tax and a 1 percent tax on gross receipts, both charged to wholesalers,” according to the Washington Post.

    McDonnell simply does not think the government has any reason to hold a monopoly on the sale of a legal product, especially when private vendors are eager to get into the act. But for some bar owners, the tax proposal makes a bad thing even worse. They were already concerned about the product they sell becoming more readily available across Virginia. Now, McDonnell wants to stick another tax on them to help pay for the same plan that could hurt their business.

    “More taxes. Where does it end?” one Alexandria bar manager complained to the Post. “Restaurants are already struggling. Small businesses run this country.”