Keep Liquor Sales Public So All Profits Benefit Saskatchewan Families
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Keep liquor sales public so all profits benefit Saskatchewan families Why risk losing millions in public revenue? ° All the money earned by our province's public liquor stores - $252 million last year - is returned to Saskatchewan families and communities – and helps pay for services like schools, hospitals, roads, parks and recreation. It’s NOT a choice between hospitals or liquor stores ° Don’t be fooled by Brad Wall saying that it’s a choice between spending taxpayers’ money on building new hospitals or on new liquor stores. ° A public liquor store is not a drain on provincial finances. It is a money- making asset. The Saskatchewan Liquor and Gaming Authority (SLGA) earns more than enough revenue to cover all of the costs of building additional stores. No public tax dollars are needed to construct new liquor outlets. Each additional new store would easily pay for itself, and still earn millions - money that could help fund hospitals and schools. Four new private stores will cost taxpayers a bundle ° Government’s decision to let four new private liquor stores open – two in Regina and two in Saskatoon – will cost taxpayers between $3.5 to $7.5 million each year in lost revenue. That’s money SLGA could have earned if the new liquor stores were public. Over the years, those losses will grow, depriving families and communities of millions for needed services.1 Public system is more profitable ° Saskatchewan’s public liquor stores are more effective at generating profits for the province than private liquor systems. Alberta has lost almost $1.5 billion in revenue from liquor sales since it privatized stores in 1993. 2 What we would lose with an Alberta-style system ° Saskatchewan people would have lost $65 million in 2013 if SLGA earned the same return on investment as Alberta’s liquor system that year. Over the past five years, we would have lost $230 million in revenue. 3 2 We have the financial edge ° Saskatchewan’s public liquor network is a better revenue generator than Alberta’s – and, it’s not because prices are higher here. Many studies show that liquor retail prices in Alberta are not lower, and are often higher, than Saskatchewan prices. Better prices at public liquor stores ° Prices in Saskatchewan's public stores are lower than the Alberta average for 70 per cent of beer products, 76 per cent of spirits, and 86 per cent of wines, according to a comprehensive study by University of Saskatchewan business professor Colin Boyd. 4 ° In B.C. - where there are both public and private liquor stores - prices in the private outlets are on average 10 - 15 per cent higher than in public stores. 5 ° Many of your favorite beer, wine and spirits are cheaper in Saskatchewan than in Alberta or B.C.'s private stores, according to 2012 research that surveyed 13 popular products. 6 Family-supporting jobs keep our province strong ° Public liquor stores earn high profits for Saskatchewan people while at the same time creating approximately 800 good-paying jobs in cities and towns across Saskatchewan. These wages are taxed and this money is returned to the province as income tax revenue. ° Especially in small town Saskatchewan, the jobs of public liquor store workers help keep communities economically and socially viable. Workers who are paid a living wage have money to spend in local businesses. They also pay local taxes and send their kids to local schools. ° After Alberta privatized liquor sales, wages for full-time store clerks fell by 50 per cent. 7 The cost of privatizing rural liquor stores ° The four small town stores government closed in 2014 were all profitable. The Ituna, Ponteix, Langenburg and Kerrobert stores earned $4.36 million for Saskatchewan people over the last five years. 8 The stores offered good selection and service and provided the kind of good-paying jobs that support rural families and communities. The business was handed to existing private retailers, who are unlikely to hire new employees to replace the jobs that were lost. 3 Little to gain from selling-off public assets ° The one-time cash proceeds from selling-off the SLGA’s stores would be relatively modest, since most of the high-earning urban stores are leased, not owned. The five most valuable SLGA-owned properties have an assessed market value of $5.5 million, less than 0.2 per cent of the provincial debt. 9 No big boost from corporate taxes ° The vast majority of liquor retailers would not earn enough to pay the province’s 12 per cent corporate tax. Most would qualify for the much lower 2 per cent small business tax rate. Only a handful of private businesses operating big urban stores would earn enough to pay the full corporate tax, so there would not be a huge increase in revenue from business taxes. 10 Government pressured to reduce its revenue ° The mark-up is a tax or levy government collects from liquor sales, and is revenue that flows back into the public treasury to help fund services to Saskatchewan people. In a private system, governments are pressured by business to reduce the mark-up, to give private liquor retailers the ability to earn more on each bottle sold – since the less they have to remit to government, the more they can take as profit without having to raise prices. ° Shortly after privatization in Alberta, the government lowered its mark-ups by about 20 per cent on average. Another reduction in the mark-up followed a year later. Mark-ups were increased in 2002, but in absolute terms are lower than they were just after privatization. 11 ° The Alberta government attempted to raise more revenue - $180 million a year – to help fund social priorities, but was forced to rescind the increase following pressure from the private liquor lobby. 12 ° Saskatchewan’s public system does a much better job of keeping liquor prices reasonable and getting substantial revenues from mark-ups. A good mix: SLGA balances profits and public priorities ° Saskatchewan’s public liquor system is exceptionally profitable. It balances making money with other social priorities, such as promoting safe drinking, maintaining reasonable prices, and creating middle-class jobs that help support Saskatchewan families, especially in our smaller rural communities. Why would we want to give any of those benefits up? 4 Sources 1 Campanella, David. A Profitable Brew. A Financial Analysis of the SLGA and Its Potential Privatization. CCPA/Parkland Institute, 2014, p. 19. 2 Flanagan, Greg; Campanella, David . Impaired Judgment: The Economics and Social Consequences of Liquor Privatization in Western Canada , 2012, p. 14. 3 Campanella, A Profitable Brew . p. 28, 22. 4 Remington, Robert. “Raise a glass to cheaper booze in Saskatchewan .” Calgary Herald , March 12, 2011. 5 Stockwell, Tim, et al . The Price of Getting High, Stoned and Drunk in B.C., Centre for Addictions Research of B.C., University of Victoria, 2010, p. 4. 6 Flanagan, 2012, p. 11. 7 West, Douglas. The Privatization of Liquor Retailing in Alberta . Public Policy Sources. Fraser Institute, 1997, p. 37. 8 Campanella. A Profitable Brew . p. 16. 9 Campanella. A Profitable Brew . p. 26. 10 Campanella. A Profitable Brew . p. 27. 11 Campanella. A Profitable Brew. p.24. 12 Campanella. A Profitable Bew. p.24. .