Las Vegas Sun

August 22, 2014

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STATE BUDGET:

Gaming down? Sure. Drinking? Not so fast

The latest state tax numbers were gloomy.

Sales taxes fell to levels not seen since 2006. The gaming tax is down 6 percent. Tax from property sales was down 29 percent.

But there was a glimmer in the numbers released last week — the olive in the Silver State’s martini.

Of the major taxes collected by the state, the one that increased the most was the liquor tax.

It appears we’re dealing with our little financial Armageddon by hitting the sauce.

Liquor tax collection in Nevada from July 1, 2007, to June 30 was up nearly 3 percent from the previous 12 months.

Is this a recession-proof industry?

In good times, we celebrate with it. In bad times, we cry into it.

Said Jeremy Aguero, a principal at the financial consulting firm Applied Analysis: “The reality of it is, liquor tends to be highly elastic.”

Huh?

“When things are bad, people still buy liquor.”

Do we ever.

Over the past year, Nevada wholesalers sold 94.1 million gallons of alcoholic beverages to retailers.

Beer sales were stagnant compared with last year, totaling 77 million gallons, or about 821 million bottles.

The same for hard liquor, the stuff stronger than 22 percent alcohol (44 proof), which was up only 1.5 percent.

The big boom came in beverages of between 14 percent and 22 percent alcohol; their sales increased 10 percent. That includes wines on the higher end of alcohol content, but also fortified wine, liqueurs and “light liquor.”

Experts were hard-pressed to explain the increases.

Joe Wilcox, former president of the Nevada Tavern Owners Association, who is now head of its political action committee, was puzzled.

“If people are drinking more, it certainly isn’t in the taverns,” he said.

Nevada-style pubs (i.e. drinks and video poker) are still smarting from the smoking ban that took effect in 2006. A survey the association conducted found 27 of 32 taverns indicating business was down in 2007 compared with 2006.

“You’ve got me there,” he said. “Upper-end restaurants and wine sales? That’s the only thing I can figure.”

Yet that theory is problematic because alcoholic beverages are taxed at the wholesale level, based on volume, not price. So the Grey Goose vodka bought wholesale is taxed equally with the Albertsons brand vodka in the plastic jug.

Perhaps as casino companies report plummeting earnings and tavern business falls off, we’re sitting in our almost-foreclosed homes with a box of fortified wine, hoping that by the time we wake up, things will look a little better.

But that’s not all bad.

Sandy Heverly, executive director of Stop DUI, said there are fewer fatalities involving impaired drivers, a good indicator that folks are drinking and driving less.

She credited tougher police enforcement. And, she said, “due to the cost of gas, people are still drinking, but they’re not driving as much. I guess they’re drinking at home.”

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