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Norquist: McDonnell's ABC plan does not raise taxes

Rosalind Helderman

Gov. Bob McDonnell's proposal to privatize state-run liquor stores would not raise taxes, declared perhaps the nation's best known anti-taxer today.

In a letter sent to members of the Virginia General Assembly today Grover Norquist, president of Americans for Tax Reform, analyzed the taxes and fees McDonnell has suggested be imposed on liquor in a private system and declared that McDonnell's plan does not contain a net tax increase.

Norquist said legislators who have signed pledges not to raise taxes could vote for McDonnell's proposal without violating their promises.

Some Republicans have said they feared the plan might look like a tax hike to the public, particularly because of a 2.5 percent fee that would be imposed on restaurants that chose to buy liquor from wholesalers in a new system.

(Del. Brenda Pogge, for instance, has said she believes it would be a "hard sell" to convince the public that the plan does not contain new taxes. "We recognize taxes when we see them," she said on the day the plan was unveiled.)

McDonnell (R) has countered with the same argument endorsed by Norquist today: His plan, as a whole, raises no more money for the state than the current state monopoly and, thus, does not raise taxes.

For McDonnell, the tax issue has been a tricky one. Many Democrats and some Republicans have said they oppose the plan because it does not fully replace the revenue now brought in to the state's general fund by Virginia's liquor monopoly. McDonnell estimates that his plan will raise about $20 million less in fiscal 2011 than would the current system.

If McDonnell looks to close that $20 million gap by boosting the taxes in his proposal, he'll upset legislators such as Pogge who don't want to vote for a plan that imposes high excise taxes and license fees on the businesses entering Virginia's new spirits market. But if he tries to shore up support with conservatives by trimming the taxes in his plan, it will make the state less money and he'll probably lose other votes.

The Norquist nod should help with the conservative base.

Norquist, who writes in the letter that he supports privatization and believes it would be a "victory for free enterprise," still says McDonnell's plan has "room for improvement."

He calls McDonnell's proposed $17.50 per gallon excise tax "onerous," noting that that rate would be higher than the national average and the highest in the region.

By Rosalind Helderman  | September 27, 2010; 4:32 PM ET
Categories:  Liquor privatization, Robert F. McDonnell, Rosalind Helderman  
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Comments

Norquist is another GOP fraud. You can call them fees or whatever you want, they are still a tax on the consumer. Where does the GOP find these people and why does anyone, including WaPo listen to them?

Posted by: kinsman_bob | September 27, 2010 4:54 PM | Report abuse

The current ABC "mark up" is over $20.00 per gallon. That "mark up" is a tax regardless of what it is called. ABC is an absolute monopoly and the "mark up" is set to create a certain profit for the state coffers. l The proposed "excise tax" of $17.50 basically off-sets the current "mark up" tax. It is too high in the ideal competitive world, but the marker for privatization has been that the same amount of money, or close to that figure, will be generated from this effort. The plan offered at this point in time brings in about the same amount, actually a little less. This is a proposal and it will change some, but the goal is a good one: get the government out of a commercial enterprise it never should have been involved in and do it in a way that protects the taxpayers, the consumers, and the commerical interests in our state.

Mike Thompson

Posted by: mikethompson1 | September 28, 2010 10:14 PM | Report abuse

Still an IDIOTIC plan ... What about unemployment benefits for all the present state workers put OUT of a job?? And is Gov McBob trying to close all the restaurants and local bars in "one fell swoop?" People already don't want to pay the cost of a mixed drink.. This plan" is another way to make him "look" like a #1 politico. I think he is full of "HIMSELF" ...

Posted by: nwcmbrg57 | September 28, 2010 10:54 PM | Report abuse

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