Illinois’ Bottle Deposit Fee: How to make a market more uncompetitive

Illinois HB1799 would impose on the consumer a deposit fee of 5 cents on each beverage container sold. If the consumer returns the beverage container, it would be entitled to a refund.

Many would deem this a benevolent bill that seems harmless on its face. However, what seems harmless could actually deliver a great burden to liquor sales in Illinois.

Illinois’ present liquor system puts its retailers at a great disadvantage and leads to retailers experiencing decreased sales and profit margins.

Specifically, Illinois’ cost of doing business through excessively high taxes versus retailers in other states, puts Illinois retailers at a competitive disadvantage. The cost of excise tax per gallon of alcohol is substantially higher than in the border states. If you look at the three categories of liquor beer/wine/spirits, Illinois’ numbers presently read $.231/$1.39/$8.55, Indiana’s are $.115/$.47/$2.68, Missouri’s are $.06/$.42/$2, and Wisconsin’s are $.06/$.25/$3.25.

On spirits alone Illinois’ rate is three times that of Indiana, over four times that of Missouri, and over two and half times that of Wisconsin.

The Illinois retailers which absorb the higher cost of purchasing product than border state competitors have no choice but to pass this onto customers.

With the absurd rates of comparison, Illinois retailers are fighting a strong tide. I have talked to many retailers on the border that need to get creative with promotions and contests just to get people in the store.

But just as you need a reason to get them into the store, you also have to prevent consumers from having another reason not to visit the stores. With the high tax differential, many Illinois retailers are fighting a losing battle.

Now with the potential addition of a bottle deposit fee, you are pushing up the consumer’s price even higher. And one must wonder when does the loyal customer say enough is enough with all the fees and tax, and I am giving up and going to Missouri or Indiana to purchase product.

Illinois border retailers are fighting hard and fighting an uphill battle. Let’s hope the legislature does not pile on and make a difficult situation worse!