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July 2019 will mark two years since Minnesota repealed its Prohibition-era ban on selling alcohol on Sundays. In 2017, then-Gov. Mark Dayton, a DFLer, signed legislation “allowing for the sale of alcohol from stores on Sundays between the hours of 11 a.m. and 6 p.m.”
Until the change, “Minnesota was one of just 12 states that still banned liquor stores from opening on Sundays while all of its neighbors legalized Sunday liquor sales,” as the Associated Press reported.
In 2015, when the state still prohibited Sunday liquor sales, one Mall of America store offering “exclusive spirits, liqueurs, and wines” estimated losses of “about $50,000 to $100,000 a year,” as the Star Tribune reported.
There have been reports implying the increased booze-purchasing hours may not have been as economically beneficial to Minnesota as expected.
However, the reports didn’t mention that to truly understand the financial impact of Sunday sales, sales-tax collections actually should be excluded from the analysis. Beer, wine, and liquor are subject to the state general sales tax (6.875 percent) and the liquor gross receipts tax (2.5 percent). These taxes are imposed at on-premise establishments, such as bars and restaurants, and off-premise establishments, including package stores and grocery stores. It is estimated that around half the retail tax collected on alcohol is from on-premise establishments.
To understand the impact of Sunday sales, it’s actually better to look at excise tax collections. An estimated 75 percent to 80 percent of all sales, as measured in volume, occur at off-premise establishments. According to data from the Minnesota Department of Revenue, the state collected an estimated $86.8 million in annual excise taxes during the pre-Sunday sales period. Since Sunday sales began, excise taxes have increased to $90.4 million, a growth rate of 4.2 percent. Typically, alcohol tax revenue grows around 2 percent to 2.5 percent annually. Sunday sales in Minnesota seems to have generated a much higher revenue growth rate.
Moreover, with full-strength beer sales boosted as well, it’s safe to say that Sunday sales has provided an economic gain to Minnesotans and will continue to do so. Minnesota and Utah are the remaining two states where only 3.2 percent beer can be sold in grocery and convenience stores, according to the St. Paul Pioneer Press.
With package stores being the only stores allowed to sell full-strength brews on Sundays, the Minnesota Service Station and Convenience Store Association estimates that sales of 3.2 percent beers have dropped by as much as 80 percent in convenience stores and gas stations between July 2017 and July 2018, according to the Minneapolis/St. Paul Business Journal.
That is not to say that more research is needed. Although package stores are allowed to be open on Sundays, some may choose not to be, and there is no data indicating how many stores are actually open. There is also no data on what and how much alcohol is being sold on Sundays.
But if data on excise taxes is any indicator, Minnesota already has experienced more revenue with the advent of Sunday sales.
[Originally Published at the Duluth News Tribune]