Say you buy 10,000 cartons in the USVI, and pay the sales tax on them, at the price of $2.50 a pack and then ship them to New York City where you sell them for 7.50 a pack; thereby offering a lower price to the consumer and earning a profit. Doesn't trying to prevent this constitute a form of protectionism? Don't the costs of enforcement outweigh any benefits the state might receive? What is the logic behind such laws?
Another example is that of the bottle-price law. In my state, Connecticut, package stores have to sell at a minimum above the bottle price. So if the distributor sells me a fifth of Ketel One at $15 I have to sell the bottle at a price above $18, and even if I purchase two cases of Ketel One and receive a discounted price of $10 per bottle I still have to charge the same minimum price. Other interesting fact about packies; they can't sell food. Although supermarkets can't sell hard liquor, so I guess the folks in Hartford figure that balances things out. Furthermore, if you own a package store you can only deal with distributors from within the state. So I can't buy a case of wine in France, ship it to New York, and then drive across state lines to sell it in Connecticut.
I love it when people say that the free market has failed; there is no free market.
CrazyCoot:Don't the costs of enforcement outweigh any benefits the state might receive?
Who pays the costs?
True, it's nice having to pay for the stupidity of others.
Arbitrage is typically illegal and, if it isn't, the State will make it so the minute anyone starts making real money.
You can get away with it on a small-scale. I used to bring as many cartons of cigarettes back with me to London as I could because, in South Africa, they were about 1.20 Pound Sterling a pack compared to 6.00 Pound Sterling in London.
CrazyCoot:I love it when people say that the free market has failed; there is no free market.
No ****, and on this issue I feel it more than you know. I want to start a winery and the bonding and licensing process is ******* ridiculous. First off, no one knows what the hell to do. All the winery owners here I know gave me a different story, the only common element seems to be they all kept butting their heads against the wall of the bureaucracy until it let them through. Two, the cost associated with getting bonded and complying with the alcholol laws is making me seriously think of calling my winery "My Left Fucking Nut," or, "My First Born," just to give people an idea of what it cost to get going, should I ever get it going.
And without all this ******** I'd already be distributing small production amounts to friendly restaurants where people I know have tried and liked my home made wine. I could handle the amount in a garage with a few 1500 gallon tanks. But nooooooooo. I'd need to rezone for retail, even though I'm not retail, and then I'd have to pay someone to go over my solid waste with a magnifying glass to make sure it's all there, just in case some bootlegger got the urge to lift some of it to make home made grappa or something. Oh, and I need to know where every God damn ounce of wine is every second of the day and document that, because otherwise it might end up in the hands of "The Children"...
[Mod edit: Please don't curse.]