In a move to recapture liquor sales lost by Washington to the suburbs, the D.C. City Council voted yesterday to reduce the alcohol tax by 50 cents a gallon, cutting the likely retail price of a fifth of whiskey by about 10 cents.
In a business where sale prices and profit margins are measured in pennies, the reduction would significantly narrow - and in some cases erase - the gap between generally higher Washington prices and those charged in nearby Maryland and Virginia.
The Council also voted to permit the city's legitimate theaters to sell alcoholic beverages to their patrons between acts, a privilege now limited to the federally-owned John F. Kennedy Center for the Performing Arts.
The tax-cutting measure was proposed by Mayor Walter E. Washington in an attempt to reverse a 24 per cent drop in liquor sales over the past seven years. The trend began when Congress raised the tax on alcoholic beverages to $2 a gallon in 1970. The new bill would lower that to $1.50.
A spot check yesterday of liquor prices in Washington and the suburbs showed a wide variation in prices quoted on three popular items. A downtown high-volume discounter usually - but not always - offered the lowest shelf prices, and a small store in a residential neighborhood of northwest Washington charged the highest.
For example, a fifth of Early Times bourbonwhiskey - including retail sales taxes - cost $3.79 on special at the county-owned Montgomery Council liquor stores, $4.44 on special at the downtown discounter, $5.13 at a private retailer in Prince George's County and $5.57 in northwest Washington. The price in Virginia's state-owned stores where no sales tax is charged was $4.95.
Fifth of Gilbey's gin cost $3.49 at the downtown discounter, $4.29 in Montgomery County, $4.30 in Virginia, $4.44 at the northwest Washington stores and $4.61 in Prince George's.
CuttySark scotch whiskey, regarded as a luxury item, cost $6.35 on special at the discounter, $7.30 in Montgomery County, $7.60 in Virginia, [WORD ILLEGIBLE] at the northwest Washington store and $8.39 in Prince George's.
Although supported by the city's retail liquor industry, the bill got its principal impetus from city officials [WORD ILLEIGBLE] over the drop in taxes from liquor sales.
[WORD ILLEGIBLE] officials, it was a case of a [WORD ILLEGIBLE] that went haywire. When the tax was raised to its present level in[WORD ILLEGIBLE] officials confidently expected it would add $1.5 million annually to the city's coffers, paying for wage increases for police and fire fighters.
The opposite happened. Revenues that had totaled $12 million in 1970 plummetedto $9.2 million by 1976. The accumulated loss by 1976 was $9.6 million.
The trend to suburban liquor purchasers was speeded when many Virginia stores, which traditionally had closed at 6 p.m., began staying open until 9 p.m. to catch the commuter trade.
Yesterday's Council action was applauded by Buddy Weitzman, treasurer of the D.C. Retail Liquor Dealers Association, who forecast an increase of 6 to 7 per cent in city liquor sales as a result of the tax decrease.
Since Washington liquor stores have depended on a high volume of sales with a low profit per item, he predicted the entire saving from the lower tax would be passed on to consumers.
In its report on the bill, the Council's finance and revenue committee said the sale of liquor to theatergoers would provide "an amenity which is taken for granted elsewhere in the United States and abroad."
Moreover, the report said, the liquor sales would be an important supplementary source of revenue for the city's financially hard-pressed theaters - more than $1 million a year for the National Theater and $750,000 for the Arena Stage, it estimated. The city's expected tax yield would be $379.000.
The theater provision led Council member Jerry A. Moore Jr. (R-at large), a Baptist minister and a non-drinker to cast the only vote against the measure. It was approved on first reading by voice vote, without a roll call.
The Council took these other actions yesterday:
On an emergency basis, it further restricted the rights of landlords to convert some apartment houses into condominiums. Existing law permits owners of "high rent housing" to convert their properties without restriction.
The new measure raises the definition of high rent: from $212.50 to $247 for a one bedroom apartment; from $267 to $288 for two bedrooms; from $375 to $403 for three or more bedrooms, and from $162.50 to $205 for an efficiency apartment.
Council member Polly Shackleton (D-three), the measure's chief sponsor, said the lower figures had become outdated. She said the higher figures might restrict the conversion of six or seven buildings west of Rock Creek Park, and an uncertain number elsewhere in the city.
Also on an emergency basis, it imposed residential parking restrictions on 65 more blocks in the Friendship Heights, Walter Reed Hospital, Foxhall Village, Glover Park, Sheridan-Kalorama and Capitol Hill areas. The additions were the result of petitions from residents of the areas. The bans will take effect as soon as signs are posted.
Under the residential parking program, residents obtain stickers that permit them to park without time restriction. Outsiders are limited to two hours.
Although the program has been popular among residents, it has drawn protests from commuters who say they have no way to travel other than by car. "I think the whole program is going to run into some very severe problems," Council Chairman Sterling Tucker told his colleagues yesterday. Others said he parking bans threaten to engulf the whole city.
The Council also voted to postpone, from 1978 (as set by present law) to 1979, the year in which the city's 150 largest real estate taxpayers - those owing more than $100,000 - will have to pay their bills in a single payment rather than in two installments.