The latest debate over Sunday liquor sales in Minnesota has featured claims that Minnesota is somehow missing out on $10 million in tax revenues.
I've debunked parts of this claim via twitter and comments sections, but thought it worth a post because this shows how interest groups can use data to mislead the public and policy makers. I wrote about this when it came up last session and won't repeat myself here.
Let's focus on this commentary by the Distilled Spirits Council published in the Strib with the subhead: "The Sunday ban on liquor sales costs state an estimated $10 million." The author says:
Colorado, the most recent state to enact Sunday sales, even saw its 2008 alcohol excise tax revenue collection increase by 6 percent despite the toll of the recession.
Well, not quite. Colorado's 2008 alcohol tax revenue, according to the state's annual report, only increased by 1.5 percent over 2007. But since Sunday sales took effect July 1, 2008, perhaps the author meant the 2009 fiscal year ending July, 2009. A Denver news report says:
Colorado State Treasury’s data shows that liquor, beer and wine tax revenues increased by $2,056,858 in the 12 months following July 1, 2008, when the bill allowing Sunday liquor sales went into effect.
Now, there may be various reasons why Colorado saw a bump in 2009, but why should we suppose the growth in FY 2009 was due to Sunday sales? Especially when Minnesota's alcohol tax revenues increased almost $3 million between FY 2008 and 09 [PDF], without benefit of adding Sunday sales?
Another claim made in the piece:
A national analysis of states that allowed Sunday sales between 2002 and 2005 (12 states) showed that in 2006 each state saw an average 5 to 7 percent increase in tax revenues.
I have no doubt that's true, since during the same period, Sunday-deprived Colorado saw a 10.3 percent gain and Minnesota saw a 3.3 percent gain.
In other words, revenue from alcohol sales slides around from year to year, and depending on the period you select, you can make the numbers dance your dance.
But the most troubling thing to me is the takeaway the Strib opinion piece is allowed to leave. Even by the Distilled Spirit Council's own estimate, only about half of Colorado's $2 million gain in one year could be attributed to higher liquor store sales. (Two percent of the 6 percent gain was the national average gain and about 75 percent of the alcohol taxes collected come from package liquor stores, according to the Council,)
Allowing for Minnesota's higher alcohol tax rate overall (it takes in roughly double what Colorado does), how do we get to $10 million more in tax revenue with Sunday sales?
And if you think the difference is coming from recaptured sales lost to Wisconsin, please comment here so I can debunk that one, too.
For the real tax nuts, I've added a couple analytical footnotes to his post over at the Growth & Justice Blog.