With Alcohol Consumption Down, Will Sunday Sales Take A Hit?
A working group tasked with making recommendations to lower the state’s alcohol prices examined data Wednesday finding Connecticut showing declining alcohol consumption in the state.
The study, published last year by the National Institute on Alcohol Abuse and Alcoholism, examined alcohol consumption trends between 1977 and 2009. Though it’s fluctuated over the years, Connecticut like most states, has seen a general decline in the consumption of alcohol over the past three decades.
UConn economist Stanley McMillen, a member of the task force, said the results were surprising, given that Connecticut has higher than average incomes.
“From an economic point of view, alcohol beverages are a normal good. The higher your income the more you consume but it’s not necessarily true,” he said.
David Rutigliano, co-owner of the SBC Restaurant Group, said the drop in consumption may be attributable to most residents having less discretionary income.
“You can get as political as you like, but Connecticut is a very expensive place to do business,” he said. “... I think consumption on most discretionary things has to do with how much money people have in their pockets left over.”
Rutigliano said his organization has found that the price of gas has a significant effect on the amount of money people have to spend on things like alcohol or going out for dinner.
“It’s astounding, it’s absolutely. We have restaurant locations in what would be perceived as a wealthier town that have done fine throughout this whole process and as soon as gas goes up a little bit sales start to drop. It’s amazing how it eats up peoples’ money,” he said.
Rutigliano said that restaurant owners and alcohol retailers only deal with the income customers have left over to spend when they’re done paying for necessities. When customers’ gas budget inflates something else has to give, he said.
McMillen agreed and said another factor in declining alcohol consumption stems from stagnant median and average incomes in Connecticut.
“They haven’t kept pace with inflation. So as incomes are not rising, the price of that particular essential commodity is rising, it has to take it out from other spending sources and it’s primarily discretionary,” McMillen said.
While people drinking less alcohol may not necessarily seem like a bad thing, it does mean less tax revenue for the state.
Marc Papandrea, tax unit manager for the Department of Revenue Services, said that in fiscal year 2012 the state saw an 23.9 percent increase in revenue from alcohol sales, but he speculated it was largely attributable to tax increases.
Over the past year the state has taken steps to discourage residents from travelling out of state to buy their liquor, which sends revenue to other states. The bill that established the task force also legalized the sale of alcohol on Sundays.
Papandrea said it’s too soon to tell whether that change has more people staying staying in Connecticut to purchase alcohol. Though the department can compare revenue from June of last year to this June, he said the comparison may be distorted by savvy customers stocking up on liquor ahead of a tax hike that kicked in in July of last year.
And even if Sunday sales made it more convenient to buy liquor in Connecticut, it’s still significantly cheaper to buy booze in nearby states like Massachusetts.
Dave Leon of Super Cellars in Avon suggested cracking down on Connecticut residents buying huge amounts of liquor in Massachusetts and not self-reporting their purchases to Revenue Services.
“That would be a potential revenue, I think, a huge revenue situation,” Leon said.
Papandrea said the use tax, which applies to out-of-state alcohol purchases over four gallons, comes down to self reporting and the department lacks the resources to enforce it. Rep. Kathy Tallarita, D-Enfield, said that manpower would be a serious problem for the state if it chose to ramp up enforcement.
“You’d literally have to have somebody at the borders looking at peoples’ cars as they drive over. Border patrol for alcohol, I think that’s going to be low on our priority list. But when people fill out their taxes, they’re supposed to report any item whether it be clothing, alcohol, no matter what it is that they’ve purchased out of state,” Tallarita said.