The plan to turn a piece of the B.C. government’s liquor distribution monopoly into a corporate monopoly is dead (thankfully), but that shouldn’t mean an end to the debate over government’s role in the alcohol business.

The bigger question is: should taxpayers be in this business at all? B.C.’s Liquor Distribution Branch (LDB) exerts extraoridnary control over liquor sales in both government and private stores. Because the LDB has their own network of 197 government stores, it is in their fiscal best interest to make it as difficult as possible for the 1,200 private retailers to make a go of it. Government keeps private liquor store margins razor thin. Yet private sector involvement in B.C. liquor stores results in new businesses, new jobs, and increased demand for store space, business supplies and services, computers, software, coolers, insurance, telephone and utilities, shipping services, vehicle sales and leases, advertising, security systems and real estate.

The government should look for cost savings by extending its commitment to a free market. Yesterday, the government’s data website published a Freedom of Information request for a business plan of the scrapped liquor distribution sell-off idea.

The documents show that 31.6 per cent of the price of liquor in B.C. comes from government’s cost to warehouse and distribute the booze to stores. Distribution adds $1.74 per case shipped.

It also details how government liquor stores’ sales per square foot are stagnant: sales are expected to rise 3.3 per cent over the next three years—about half the rate of inflation. 

The LDB generates about $900 million per year in government revenue. This is generated primarily through a markup on the wholesale price, a hidden tax on all liquor. This tax is charged wherever liquor is sold—government or private retailers. However, it costs $300 million per year to run the LDB and those costs rise every year even though the amount of product sold through the LDB has declined.  The government could reduce costs and increase choice for consumers by selling the remaining government retail outlets. Private retailers could purchase their liquor supply directly from manufacturers and simply charge liquor tax at the point of sale, much like the HST. It is worth studying other provinces’ experiences and having an open, honest discussion as a province.