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Article published Jun 5, 2003
Liquor minibottles may be history
PAUL WACHTER
Knight Ridder Newspapers
COLUMBIA -- Minibottles were originally thought to cut down on drunkenness, but at 1.7 ounces, they carry a half-ounce more alcohol than the standard free-pour drink. South Carolina is the only state to require the bottles.
Pete Cannon, a bartender at Goatfeather's in Five Points, has grown used to the quips from out-of-towners after they have surveyed the liquor cabinet.
" 'What did you do, rob an airport?' -- I get that a lot," he said.
South Carolina remains the only state to require the exclusive use of minibottles in its bars and restaurants. But as early as this week, the state Legislature could move to strike that requirement from the South Carolina Constitution.
The House passed a bill Wednesday and the Senate is poised to pass a nearly identical bill that calls for a statewide referendum next year to allow businesses to choose the size of their liquor bottles.
Supporters say there is a slim chance the legislation will pass before the session ends today.
If it doesn't, they are confident it will pass early next year, in time for it to be on the November 2004 ballot.
'Revenue neutral'
In the past decade, such efforts have been shot down after lobbying by liquor wholesalers and retailers as well as the state Department of Alcohol and Other Drug Abuse Services. The department receives $6 million a year from the minibottle tax, or about 36 percent of the total tax revenue.
The South Carolina Board of Economic Advisors has deemed the proposal "revenue neutral" for the agency. The bills would levy a 5 percent tax on all drinks, fully offsetting the current 29-cent-a-bottle tax on minibottles, the board said.
That finding has mollified the state's alcohol and drug abuse agency, which no longer opposes the legislation.
Reformers also claim the new legislation would increase the safety of both South Carolinians and visiting tourists.
At 1.7 ounces, reformers argue, minibottles pack too much of a punch -- a half-ounce more than the industry-standard "free pour."
Now that the state has passed a bill to lower the legal blood-alcohol limit for drivers -- from 1 percent to 0.8 percent -- more needs to be done to curb drunkenness, reformers say.
Potential for fraud
Almost 80 percent of businesses with licenses to sell mixed drinks support the new legislation, said Tom Sponseller, president of the South Carolina Hospitality Association.
One reason is that buying liquor in bulk is cheaper than buying it in minibottles.
"You do the math," said Andy Ugarte, owner of the Publick House on Devine Street.
"The big bottles mean your costs are 50 percent less and you can pour 50 percent less. That's a lot of money."
Opponents include liquor wholesalers and retailers.
Some say the state may lose revenue because of how the tax is collected.
Wholesalers now pay the minibottle tax up front.
If free-pour drinks are allowed, the tax would be collected when the drink is sold to the consumer.
"Right now, we have 100 percent tax collection on minibottles," said Bill Tovell, president of Ben Arnold-Sunbelt Beverage Co., one of four wholesale liquor distributors operating in South Carolina.
"We pay the taxes on the minibottles up front. The study of the new legislation assumes 100 percent tax collection on drinks, and I just don't think that's realistic," Tovell said.
For example, bars or restaurants might hold specials on drink prices, lowering the amount of tax collected.
But Tovell worries the state might end up raising taxes on all bottles of liquor.
"If they can't collect all the taxes on the drinks, which I don't think they'll be able to do, then they'll raise taxes across-the-board on liquor, which will drive our business out of state."
Rep. John Scott Jr., D-Richland, agrees with Tovell. "When I studied the issue eight years ago, I saw a huge potential for fraud if we got rid of the minibottle," he said.
Sponseller disagrees.
"Under the status quo, there's already an incentive to illegally buy minibottles out-of-state," he said. "The tax on 20 minibottles here is $5.94. In North Carolina, it's less than 2 dollars."
Deadline looms
Sponseller's arguments -- combined with the safety issue -- have won over most legislators, said state Sen. Dick Elliott, D-Horry, a co-sponsor of the Senate legislation. Two-thirds of the Senate has voted for the new legislation -- all it requires now is another simple majority vote. The House is expected to follow suit, legislators say.
"Once we got the revenue issue straightened out, most people agreed that people should have a choice on what they can sell," Elliott said. "I think we'll get it on the ballot in 2004."
State Rep. Jim Harrison, R-Richland,, agreed with that timetable. But he said there may be too many procedural hurdles to pass the legislation by today.
"I think both chambers will pass the bills, but to go on the ballot, one of the bills has to pass the other chamber as well," he said. "I'm not sure if that'll happen this week, but if it gets postponed to the next session, we can still get it on the 2004 ballot."
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While it is much cheaper for businesses to use larger bottles, many bar and restaurant owners say they would still use the minibottle for some liquors.
"I'd switch all my house brands to the big bottles, because it's cheaper," Ugarte said. "But I'd still keep minibottles of the good stuff -- 10-year-old single-malt Scotch and other high-end stuff.
"In a minibottle, I can keep better track of the inventory, it's easier to store, and even if it doesn't sell well, I can buy in small enough quantities that I can afford to keep it."
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