Booze Up 

Why lower liquor prices could mean higher-priced drinks.

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Just in time for summer, there are new booze prices on the shelves at your friendly neighborhood state liquor store. And they’re lower.

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But don’t get too excited. When you get that bottle up to the counter and pay the tax, it will likely cost you more than ever.

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New prices for every bottle of booze were posted at state liquor outlets July 1, thanks to a 2007 Utah law that means an accounting break for bars and restaurants but a new layer of confusion for Utah drinkers. The price of the same bottle will now be slightly different depending on where in the state you buy it.

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It used to be that the state bottle price included sales tax, and taxes were averaged statewide so booze prices were the same across Utah. But following passage of Senate Bill 205, tax won’t be added until the check-out register. That means booze will cost most in towns like Park City, which has an added tax to fleece tourists, while low-tax St. George could become the new day-trip destination for cheap liquor.

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Dennis Kellen, operations director at the Department of Alcoholic Beverage Control, said some restaurants and bars were frustrated at paying tax at their point of purchase, instead of charging consumers sales tax when they sell liquor at their establishments. Park City restaurant owner Hans Fuegi said the new pricing formula should make life easier for barkeeps who will no longer need to separate out drink ingredients, subtracting the already-taxed hooch, before computing sales tax.

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And since clubs and restaurants can now buy liquor pre-tax, their initial cost per bottle is lower: $14.14 for a bottle of Jim Beam today versus $14.95 in June.

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But some bar owners aren’t sure that savings isn’t a smoke screen. Bob Brown, owner of Cheers to You in Salt Lake City and president of the Utah Hospitality Association, a private-club lobbying group, says it looks like a price hike.

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That’s because the new pricing formula jumps the state liquor mark-up'from 64.5 percent above what the state paid in June to 86 percent today. The bigger margin is required to make up for a school-lunch tax that goes away with the new pricing formula.

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The DABC, in an announcement, said the price change is “revenue neutral”'to the department. It could be another story, however, for state, county and city governments, which might benefit, since their same old sales tax rates are now being applied to an inflated bottle price.

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“Yes, [private clubs] will be able to buy without tax, but the liquor is going to cost more money,” said Brown. “It’s kind of a crock. The bottom line is, they are raising the cost of their alcohol.”

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Brown hasn’t done the calculations yet but thinks the end result for bar patrons could be higher-priced drinks.

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