Yes, taxes matter

We’ve noted that Oklahoma’s liquor laws are overly complex and impede the free market. Defenders of the current system may take heart in the results of Washington state’s privatization of the liquor market. That would be a mistake.

Previously, the state of Washington owned liquor stores; nongovernmental sellers could only provide wine or beer. State voters recently approved a measure to privatize the industry. The number of retail outlets surged from 328 to more than 1,500.

You would expect that to lower costs to consumers, but liquor prices rose 17 percent. The reason for the increase wasn’t a bizarre side effect of greater competition, but significant taxes of 10 percent and 17 percent imposed on distributors and retailers, respectively.

Just as excessive regulation can reduce competition and drive up prices, excessive taxes can undermine the benefits of competition and punish consumers.

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