Sunday, November 04, 2012

Counting under the influence - assessing the Allegheny County drink tax.

Here is a thought sparked because I saw a recurrence of an enduring debate in a thread on the Pittsburgh City-Data Forum.   The argument thrown out there a bit superficially is that the "drink tax" in Allegheny County is responsible for some reported closings of drinking establishments that have been in the news locally. 
Causality... correlation....  whatever!
Remember, the 'drink tax' as the Allegheny County Alcoholic Beverage Tax is called.. was originally the 10% (since lowered to 7%) supplemental tax Allegheny County collected on Alcoholic beverages.  It was enacted at the end of 2007 supposedly to aide the county in paying its share of funding for transit.  We will skip that whole debate for the moment.  The argument at hand, as some clearly believe and purport, is that the tax is responsible for drinking establishments shutting down in Allegheny County.  Is that true?

Again, the plural of anecdote is not data and the passing news article does not answer the question at all.  It is honestly a big question, but if I wanted to answer the question superficially I would start with some known data.

So the number of establishments classified as NAICS code 7224 (Drinking Establishments - Alcoholic Beverages) is known.  Looking at Allegheny County the average number of drinking establishments by quarter looks like this going back to 2005, which I picked as being before there was any mention of a drink tax locally.  I have also highlighted the period 2008 forward which covers the

So yeah.. Look at that.   Sure looks like the drink tax put the big cruncher on local bars. Break out the pitchforks and let's storm the Gold Room!
Maybe before we do that it is worth looking at what has happened to the number of drinking establishments in... say... Pennsylvania?  Those establishments shutting down here must be moving elsewhere in the state? I get this:

Hmm... Must be that new statewide drink tax is also having an impact.  I mean, there must be a new tax causing that decline right?  

Maybe what begins to answer the question is what is the share of drinking establishments in the state that have remained open here in Allegheny County.  I get this?

This all does make me wonder a bit what is happening in the local market for liquor licenses? One way or another the number of establishments is down a fair bit.


Anonymous Anonymous said...

since you brought it up, why are the number of drinking establishments decreasing in the state as a whole? is the price of a license causing fewer people to purchase them? inquiring minds want to know

Monday, November 05, 2012 11:49:00 AM  
Anonymous Anonymous said...

Just a shot in the dark - more restaurants are picking up the licenses, such that the number of licenses is remaining constant, but the portion of them that are assigned to bars is declining? Or does that NAICS code also pick up restaurants?

Monday, November 05, 2012 2:11:00 PM  
Anonymous MH said...

It's getting easier to buy six packs (grocery stores, etc.) and harder to drive home after drinking a six pack at a bar.

Monday, November 05, 2012 3:13:00 PM  
Anonymous DBR96A said...

It's the economy, stupid!

Monday, November 05, 2012 5:55:00 PM  
Anonymous MH said...

Blaming the economy assumes that alcohol is a normal good. I'm not sure that applies here.

Monday, November 05, 2012 6:27:00 PM  
Anonymous FB said...

Since this tax falls on the customer, not the business, the only way it could have a negative impact on these establishments would be to keep customers away.

Does anyone have any evidence that people in Allegheny County are buying fewer poured drinks, because they have to pay an extra 7%?

I have never heard anyone say that the drink tax has effected their drink-buying. Of course, that is anecdotal evidence.

Monday, November 05, 2012 8:09:00 PM  
Anonymous MH said...

The post is a good reminder. I'd find it hard to believe the casinos have had nothing to do with this.

Monday, November 05, 2012 8:57:00 PM  
Anonymous MH said...

The next post, that is.

Monday, November 05, 2012 9:13:00 PM  
Anonymous Anonymous said...

Has anyone looked into the impact of the Clean Indoor Air Act on these numbers? Although most small bars could get exceptions (60 percent in Allegheny County do), I'm wondering what the impact on restaurants was. It seems like we've seen an increase in fine dining in Pittsburgh since the passage of the law. (An increase in "foodie-ism" nationally, too, but that's also timed with a national decrease in smoking.) My hunch is that we forget to take into account the impact of Clean Indoor Air laws in a lot of different arenas. Curious if there are any thoughts on this.

Wednesday, November 07, 2012 11:05:00 AM  
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