Lawmakers move to boot bootleggers

December 4, 2010
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LANSING — The word “bootlegging” brings to mind images of Prohibition-era cigar-smoking gangsters wearing fedoras.

It’s not an issue most people expect to encounter in 2010, but Rep. Bert Johnson, D-Highland Park, begs to differ.

“There are people who are absolutely making a living off of bootlegging,” Johnson said. “Not the smart wholesalers or distributors or retail outlets, but the ones that are unscrupulous believe that it’s an act that they can participate in, so we want to stop it.”

Johnson was the primary sponsor of a bill that raises penalties for those who sell, deliver or import liquor into the state without authorization from Michigan’s Liquor Control Commission.

A 2008 study by the LCC estimated the average bootlegger brings about $30,000 worth of products over state lines two to three times a week. That results in a revenue loss for the state of between $1 million and $2 million annually in liquor taxes.

In 2007, a bootlegger was arrested while driving a van carrying about $30,000 worth of liquor into Michigan. He told a reporter from a Detroit television station that he intended to sell it on street corners out of the back of his van and did so regularly, about three times a week.

The bill is expected to help the state generate $9.1 million annually for the general fund, primarily from fines of $1,000 to $5,000, depending on the amount of liquor involved. Under the previous state law, the maximum fine was $1,000.

The School Aid Fund and Convention Facilities Development Fund will each receive another $900,000 annually under the bill.

A companion measure, also signed into law by Granholm, makes it a felony to illegally sell, deliver or import spirits.

Lance Binoniemi, executive director of the Michigan Licensed Beverage Association, said the large gap between Michigan’s liquor tax and that of surrounding states adds to the lure of bootlegging.

The MLBA represents businesses with liquor licenses.

“We are the sixth-highest taxed state in the country when it comes to distilled spirits,” Binoniemi said. “Our tax rate is four times higher than Indiana’s and over three times higher than Wisconsin’s.”

In Michigan, the liquor tax is about $10.09 a gallon, compared to about $2.68 in Indiana and $3.25 in Wisconsin. That means a fifth of vodka that costs $17.02 in Michigan would cost only $15.54 in Indiana.

Therefore, Binomiemi said, a large profit can be made by buying liquor in another state and then smuggling it into Michigan for resale.

“Although we support increased penalties for illegal importation of alcohol,” he said, “we don’t think the legislation addresses the real problem, which is the enormous tax burden that we have in the state on distilled spirits.”

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