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Originally published July 5, 2012 at 6:44 PM | Page modified July 6, 2012 at 11:53 AM

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Retailers simplifying liquor-price tags to include taxes

Consumers complained about having to figure the tax on liquor.

Seattle Times business reporter

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Reuben Jones is among many Washington shoppers who have grumbled over the past month about having to calculate their own taxes on liquor.

"It's like smoke and mirrors," said Jones, of Bothell. "Why don't they just roll it all into one [price], the way it was before [at state stores]? It's not something I want to bother with."

He's getting his wish.

To save customers from doing mind-bending calculations in grocery aisles, a handful of retailers are adding the final, after-tax prices to liquor shelf tags in Washington.

"We learned very quickly it's tricky and difficult for people to figure out," said John McKay, executive vice president of Costco Wholesale, which will add final prices on name-brand liquor products in the next 60 to 90 days. It already displays after-tax prices on private-label Kirkland Signature liquor.

Total Wine & More added final prices to shelf tags this week, the Metropolitan Market chain is in the process of doing it, and Safeway is considering it.

Beginning June 1, when large retailers began selling liquor in Washington, most posted signs showing customers how to calculate taxes themselves. It involves adding 20.5 percent for liquor sales tax, plus a liter tax that varies depending on the size of the bottle. In some cases, those taxes can double the initial retail price of the liquor.

President David Trone of Total Wine said his chain initially programmed its computer system to show after-tax prices. But on June 1, most competitors displayed and advertised their lower, pretax prices instead.

Fearful that its prices would look expensive, Total Wine reprogrammed its system to display pretax prices. "We told IT [information technology] we goofed," Trone said.

Now he's rethought the shelf labels again and this week began displaying taxes and after-tax totals for liquor, like Bartell Drugs did all along.

April Lundberg, of Mukilteo, who recently shopped at Total Wine, has considered making a cheat sheet with some calculations on it.

Doing the math reminds her how much she dislikes Washington's high liquor taxes.

The nonprofit Tax Foundation shows Washington's liquor taxes as the highest in the country in 2010 — roughly $26.45 a gallon, compared to $24.63 in Oregon, $10.96 in Idaho and $3.30 in California.

Lundberg would prefer a tax on something everyone uses.

"I want a toilet-paper tax, because I buy good toilet paper and I'll pay more on that. I think it's the great equalizer, but I don't have a grass-roots following yet," Lundberg half-joked.

Issaquah-based Costco, which wrote the initiative that voters passed last fall to privatize the state's liquor system, already shows after-tax prices for its private-label liquor. Employees manually print those signs, because the prices don't change often.

Prices on name-brand liquor, though, can change frequently, and Costco does not want employees at each of its 27 Washington warehouses manually rewriting the signs each time it happens, McKay said.

So, the company is reconfiguring its sign-printing system to allow it to show multiple taxes and the final price. It will take 60 to 90 days before customers see the new shelf labels, he said.

Metropolitan Market is updating its labels to show after-tax prices, too, said vice president of marketing Brad Halverson.

It will continue to list pretax prices as well, so customers can compare with competitors more easily, he said.

Safeway is reconsidering its shelf tags on liquor as well, said spokeswoman Sara Osborne. Factors include possible future adjustments to liquor taxes, shelf tags at other retailers and the fact that taxes are not shown on other taxable items at Safeway.

Fred Meyer and QFC, both owned by Kroger, do not intend to make similar changes. Said Melinda Merrill, a Fred Meyer spokeswoman: "I haven't heard from our customers about it at all."

Melissa Allison: 206-464-3312 or mallison@seattletimes.com. On Twitter @AllisonSeattle.

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