Virginia governor proposes eliminating gas tax, other transport funding changes

[oscar]

As reported in today's Washington Post:

http://www.washingtonpost.com/local/dc-politics/mcdonnell-proposes-eliminating-virginias-gas-tax/2013/01/08/7858ba96-59c8-11e2-88d0-c4cf65c3ad15_story.html

My initial reaction is "unimpressed".  Basically, Gov. McDonnell seems to be trying to raise more money for road improvements, in a way that fuzzes up the resulting net tax increases (not that anti-taxers like Grover Norquist aren't seeing through this anyway).  While I appreciate the Governor's reluctance to reach into our pockets with a visible tax increase, I would not object to an exception for a straightforward gas tax increase. 

Some specific issues:

-- While the state gas tax would go, the tax on diesel fuel would stay.  My guess is this is intended to continue tax collections from out-of-state long-haul truckers (as someone pointed out, other out-of-state travelers would be largely left off the hook, though of course the Governor would like to nick them by tolls on parts of I-95), but a side effect is unfair treatment of in-state owners of diesel passenger cars.

-- The Governor is leaning heavily on the speculative prospect of increased taxes on Internet sales, which depends on the passage of controversial Federal legislation.

[1995hoo]

I commented on it in the "Virginia" thread earlier this morning, so I'll just link my comments from there. I suppose it is worthy of its own thread, though.

I'll note that my comments there talk about the idea that the sales tax might be charged on gas purchases. I heard at least one report last night that said that's how it would work, but I've heard others that suggest otherwise, and the Governor's press release (which is itself linked in my other post below) doesn't mention that issue either way. So I have no idea how that part of it would work out.

I note how the Washington Post article also mentioned "out-of-state sales tax." In addition to charging sales tax on online orders, I believe the Commonwealth is trying to find ways to force greater compliance with the so-called "Consumer's Use Tax," which says that if you buy something out-of-state without paying tax–including if you buy a product at a store in another state without paying tax, such as going clothes shopping in Delaware where there is no sales tax–you're supposed to pay tax, in the form of the "Consumer's Use Tax," when you bring the product back to Virginia. I've always found that law a bit fishy. If you buy something in Delaware, the purchase is a matter of Delaware law between you and that state. Charging a tax when you bring it back to Virginia has always struck me as being tantamount to an import duty, which is something the US Constitution prohibits states from imposing. (Apparently, however, the US Supreme Court has held "use taxes" to be constitutional. I've never done the research to learn the details.)

Here's my post from the other thread: https://www.aaroads.com/forum/index.php?topic=294.msg195836;topicseen#msg195836

[CanesFan27]

Per the Governor's Spokesman, there would not be sales tax charged on gasoline purchases.

[1995hoo]

Per the Governor's Spokesman, there would not be sales tax charged on gasoline purchases.

Thanks for the clarification. I guess the initial reports I heard last night made an assumption on that.

Given that clarification, I think some of the objections that out-of-staters would get a free ride have a lot more force. Consider that gas in Virginia is already cheaper than it is in Maryland and DC, but not so much cheaper that it necessarily warrants a trip across the river solely to buy gas–it really only makes sense if there's another reason for coming to Virginia. If you drop the state gas tax, suddenly gas is a LOT cheaper and it becomes more cost-effective to come to Virginia solely to buy gas. If you don't make any other transactions, you're getting a free ride.

Of course that happens under the present circumstances as well if you get someone who's driving from, say, North Carolina to New York who doesn't need to refuel in Virginia and who might not stop at all. But if you don't charge ANY state tax on gas purchases, you're essentially creating an incentive for someone to drive into Virginia, whereas in the current situation it's just a case of going that way because it's the most direct route.


Edited to add: It's funny, Tucker Martin, the Governor's spokesman, used to have seats two rows behind me at UVA football games. I thought I recognized the name and so I finally did an image search online and confirmed it's the same guy. I ought to get back in touch with him.

[txstateends]

The Dallas paper's transportation blog has a reaction:
http://transportationblog.dallasnews.com/2013/01/governor-wants-to-eliminate-gas-tax-fund-roads-with-higher-sales-tax.html/

[J N Winkler]

A few thoughts:

*  Trying to solve the revenue problem for transportation by eliminating the excise tax on gasoline is a bit like firefighters allowing an arsonist to bring five jerry-cans of gasoline to a five-alarm fire before they start getting out the fire hoses.

*  If Virginia's gas tax is the same as the diesel tax (17.5c/gallon), then Virginia undercharges.  Kansas, a similarly deep-red state with a fairly low cost basis for highway construction (no mountains and relatively little construction activity in densely populated areas involving high ROW costs), has a gas tax north of 20c/gallon.  Because revenues are always first applied to local/state funding splits mandated in legislation and then to maintenance, a very small 2.5c/gallon difference in the marginal tax rate corresponds to a very large difference in the capital construction budget.

*  A sales tax won't charge proportionately to use.

*  By eliminating the gas tax altogether, Virginia may run afoul of federal regulations for cost-sharing which have been drafted on the assumption that the states will rely on the motor fuel tax as the revenue mainstay of their highway networks.  (I don't get the impression that the gas tax abolition proposal has been vetted against CFR to ensure that this will not be the case.)

*  Removing the dedicated funding source for highways also removes the commitment device that ensures the revenues are, in fact, spent on highways.

[CanesFan27]

A few thoughts:

*  Trying to solve the revenue problem for transportation by eliminating the excise tax on gasoline is a bit like firefighters allowing an arsonist to bring five jerry-cans of gasoline to a five-alarm fire before they start getting out the fire hoses.

*  If Virginia's gas tax is the same as the diesel tax (17.5c/gallon), then Virginia undercharges.  Kansas, a similarly deep-red state with a fairly low cost basis for highway construction (no mountains and relatively little construction activity in densely populated areas involving high ROW costs), has a gas tax north of 20c/gallon.  Because revenues are always first applied to local/state funding splits mandated in legislation and then to maintenance, a very small 2.5c/gallon difference in the marginal tax rate corresponds to a very large difference in the capital construction budget.

*  A sales tax won't charge proportionately to use.

*  By eliminating the gas tax altogether, Virginia may run afoul of federal regulations for cost-sharing which have been drafted on the assumption that the states will rely on the motor fuel tax as the revenue mainstay of their highway networks.  (I don't get the impression that the gas tax abolition proposal has been vetted against CFR to ensure that this will not be the case.)

*  Removing the dedicated funding source for highways also removes the commitment device that ensures the revenues are, in fact, spent on highways.

First, obviously there is no perfect solution in teh sense that one special interest will be unhappy for some 'principled' reason or another.

It also pretty much admits that gasoline consumption has peaked.  More fuel efficient vehicles will obviously drive that lower.

In addition, the .8% sales tax increase will be dedicated solely to transportation funding.  As for it being used elsewhere, it really depends on how strong the legislative language is.  I'm fairly certain the NC legislature has raided their gas tax fund to fund the general budget at various points in the past decade. So it goes both ways.

The optics of this to the consumer is the key.  Gasoline is one of our most purchased items as a consumer.  17.5 cents on a 12 gallon fillup is $2.10 savings.  It's seen more by the consumer up front than the oh hey i'm just paying a penny more on the dollar.  (Yes, i know some stations may only cut costs by 15 cents and pocket the 2.5 cents.  That's their decision and I doubt any of us if we owned a gas station would not look for a way to maybe increase our profit by 1/2 a cent or 2.5 cents)

It really becomes a wash.  It's a different idea and one for discussion (the states are the experimental testing grounds for the republic).

The heart of the debate is: Would Americans rather pay a direct tax for something specific or rather see a higher general tax to pay for everything?

Should be interesting to see how it plays out.

[1995hoo]

....

In addition, the .8% sales tax increase will be dedicated solely to transportation funding.  As for it being used elsewhere, it really depends on how strong the legislative language is.  I'm fairly certain the NC legislature has raided their gas tax fund to fund the general budget at various points in the past decade. So it goes both ways.

....

Indeed Virginia has done that before. Back in 1986 during the Baliles Administration the sales tax was increased from 4% to 4.5% and the extra half-percent was dedicated to the newly-created Transportation Trust Fund. In 2002 the Trust Fund was raided, to the tune of $317 million, to help balance the budget (it's happened several other times as well). Later that year there was a referendum in Northern Virginia and Hampton Roads on a half-percent increase in the sales tax that would have applied only in those regions to help fund transportation. The referendum was defeated by a large margin. One reason a lot of us voted against it was that the promise that the half-percent would be dedicated to transportation in those regions rang hollow in light of that year's events. When we asked what assurance we had of that, we were told, "The proposed law requires that." Well, so did the 1986 law establishing the Transportation Trust Fund, and in either case there's nothing stopping the General Assembly from just amending the law if they choose.

[vdeane]

*  Removing the dedicated funding source for highways also removes the commitment device that ensures the revenues are, in fact, spent on highways.

There isn't much of a commitment to spend highway funds on highways in many places now anyways.

[J N Winkler]

It also pretty much admits that gasoline consumption has peaked.  More fuel efficient vehicles will obviously drive that lower.

Both of these may be true, but these effects can be more than offset by raising the marginal gas tax rate.  We are not yet at the point where, for example, a tripling of the gas tax will alter the financial balance of advantage in favor of, say, an electric car over a 20-year service life.

In addition, the 0.8% sales tax increase will be dedicated solely to transportation funding.  As for it being used elsewhere, it really depends on how strong the legislative language is.  I'm fairly certain the NC legislature has raided their gas tax fund to fund the general budget at various points in the past decade. So it goes both ways.

It doesn't really matter how strong the legislative language is, because one session of the legislature cannot bind future sessions of the same legislature.  That is not only a fundamental principle of representative democracy; it is also why long-term hypothecation arrangements, such as dedicating fuel tax revenue to highways or transportation in general, are done by constitutional amendment.

At a conceptual level, it is much easier to argue that a fuel tax should be dedicated to highways because it is a user fee.  With the sales tax, that argument cannot be made because the relationship to highway use is much more indirect.  What, after all, is so special about an 0.8% sales tax increment?  Why not 1.6%?  Why not 0.4% and give the public a net tax break?

The optics of this to the consumer is the key.  Gasoline is one of our most purchased items as a consumer.  17.5 cents on a 12 gallon fillup is $2.10 savings.  It's seen more by the consumer up front than the oh hey i'm just paying a penny more on the dollar.  (Yes, I know some stations may only cut costs by 15 cents and pocket the 2.5 cents.  That's their decision and I doubt any of us if we owned a gas station would not look for a way to maybe increase our profit by 1/2 a cent or 2.5 cents)

I am unconvinced that this "discount" would, in fact, be visible to the customer at the pump.  The gasoline tax is already far less than the typical fluctuation in the per-gallon price of gasoline over the course of a year.  Given that zeroing out the gasoline tax in effect disposes of the commitment to spend its revenues on transportation, I think the ulterior purpose of the proposed measure is not to close the transportation funding deficit, but rather to make further neglect of the transportation infrastructure politically safe (at least until a major bridge collapses before VDOT can get it load-posted).

It's a different idea and one for discussion (the states are the experimental testing grounds for the republic).

That's all well and good, as long as the state-level experiments do not reflect the coalescence of a consensus around bad ideas.  We have already had at least one USDOT blue-ribbon commission (under the notionally conservative Bush administration, no less) recommend a tripling of the fuel tax at both the state and federal level to meet identified funding needs.  Guess which states are experimenting with a tripling of their fuel taxes?  Yes, you got that right.  None.

[hbelkins]

I note how the Washington Post article also mentioned "out-of-state sales tax." In addition to charging sales tax on online orders, I believe the Commonwealth is trying to find ways to force greater compliance with the so-called "Consumer's Use Tax," which says that if you buy something out-of-state without paying tax–including if you buy a product at a store in another state without paying tax, such as going clothes shopping in Delaware where there is no sales tax–you're supposed to pay tax, in the form of the "Consumer's Use Tax," when you bring the product back to Virginia. I've always found that law a bit fishy. If you buy something in Delaware, the purchase is a matter of Delaware law between you and that state. Charging a tax when you bring it back to Virginia has always struck me as being tantamount to an import duty, which is something the US Constitution prohibits states from imposing. (Apparently, however, the US Supreme Court has held "use taxes" to be constitutional. I've never done the research to learn the details.)

Not sure how far we want to get into a discussion of tax policy before someone chimes in with purple text, but I'm game.

In Kentucky, sales tax is charged on any mail-order or Internet purchases made from a retailer with a physical presence ("nexus") in the state. If you order from JC Penney, you pay Kentucky sales tax because there are  JCP stores in the state. Ditto for Amazon, because there are fulfillment centers within our borders.

If you order something from an out-of-state source and no sales tax is collected, you are required to remit "use tax" to the state. A line is available on the state income tax returns for this purpose. The requirement is widely ignored, although when I worked for the Kentucky Revenue Cabinet (now called the Kentucky Department of Revenue) I threw them a bone every year on my state tax forms.

The catch is that if you physically buy something in a state that charges a sales tax lower than Kentucky's 6 percent, you are supposed to remit the difference as use tax. I'm not sure what neighboring or nearby states charge in sales tax, but say you went to a state with a 4 percent sales tax and bought a camera, you are supposed to give Kentucky the 2 percent difference.

Not surprisingly, there's no mechanism for a refund or a tax credit if you buy something in a state with a higher sales tax than Kentucky, although I recently saw an ad on television for a furniture store somewhere in the KY-TN-VA tri-state area advertising tax-free shopping to residents of the other two states.

[Brandon]

^^ Illinois is similar in that you are supposed to remit the extra tax, but no one ever does.

[1995hoo]

Virginia as well, and the part about paying sales tax when you order online from a place with a "bricks-and-mortar" location in Virginia applies too–e.g., if I buy from the Crutchfield catalog I pay sales tax, as I do if I order from Staples. That makes sense to ensure you can't avoid tax by going to the same store's website.

But paying tax to Virginia because you bought an item tax-free in another state has always struck me as wrong (and unenforceable anyway unless they spy on stores in other states.....which, FWIW, our ABC used to do!).

[cpzilliacus]

I note how the Washington Post article also mentioned "out-of-state sales tax." In addition to charging sales tax on online orders, I believe the Commonwealth is trying to find ways to force greater compliance with the so-called "Consumer's Use Tax," which says that if you buy something out-of-state without paying tax–including if you buy a product at a store in another state without paying tax, such as going clothes shopping in Delaware where there is no sales tax–you're supposed to pay tax, in the form of the "Consumer's Use Tax," when you bring the product back to Virginia. I've always found that law a bit fishy. If you buy something in Delaware, the purchase is a matter of Delaware law between you and that state. Charging a tax when you bring it back to Virginia has always struck me as being tantamount to an import duty, which is something the US Constitution prohibits states from imposing. (Apparently, however, the US Supreme Court has held "use taxes" to be constitutional. I've never done the research to learn the details.)

I have no problem with online retailers like Amazon.com and the rest of them being required to charge sales tax on items delivered to an address in a state with a sales tax.

But the idea of "use" taxes is pretty well unenforceable in many (most?) U.S. states.

Maryland currently has a 6% sales tax, higher than Virginia's 4.5% and infinitely higher than Delaware's 0% sales tax. 

For most residents of Maryland, a trip to Delaware is a relatively long journey, though I have purchased things there, from retail outlets that are not found closer to home.  But Virginia is a short trip for a large percentage of state residents, and while I don't think that people will travel that far for a measly savings of 1.5% sales tax, they might make the trip for a variety of other reasons.  I don't smoke, but cigarets are much less expensive on the south side of the Potomac River (and there are a slew of retail outlets along U.S. 301 in King George County, Va. that loudly advertise this fact to passing traffic with large signs).

And I certainly have purchased motor fuel in Virginia many times - not because there is much of a price difference, because there isn't (and filling stations in the Northern Virginia counties and cities that belong to the WMATA (Metro) Compact must collect a special 2% tax on motor fuel that helps to fund the Virginia share of WMATA transit deficits)).

I am confident that no, or very close to no, Maryland residents have ever remitted use tax.

[cpzilliacus]

But paying tax to Virginia because you bought an item tax-free in another state has always struck me as wrong (and unenforceable anyway unless they spy on stores in other states.....which, FWIW, our ABC used to do!).

Pennsylvania liquor agents have been known to spy on customers of liquor stores in Maryland just south of the border.  There was an incident some years ago where deputies from the Cecil County Sheriff's Office ended up placing one or more Pennsylvania State Police Liquor Enforcement Officers (or maybe PSP troopers) under arrest for violation of Maryland law while they were watching for Pennsylvania residents making alcohol purchases in that county.  I am not sure how the matter was resolved (I suspect that the Cecil County State's Attorney might not have been very enthusiastic about prosecuting law enforcement officers from a neighboring state).

[brad2971]

I note how the Washington Post article also mentioned "out-of-state sales tax." In addition to charging sales tax on online orders, I believe the Commonwealth is trying to find ways to force greater compliance with the so-called "Consumer's Use Tax," which says that if you buy something out-of-state without paying tax—including if you buy a product at a store in another state without paying tax, such as going clothes shopping in Delaware where there is no sales tax—you're supposed to pay tax, in the form of the "Consumer's Use Tax," when you bring the product back to Virginia. I've always found that law a bit fishy. If you buy something in Delaware, the purchase is a matter of Delaware law between you and that state. Charging a tax when you bring it back to Virginia has always struck me as being tantamount to an import duty, which is something the US Constitution prohibits states from imposing. (Apparently, however, the US Supreme Court has held "use taxes" to be constitutional. I've never done the research to learn the details.)

Not sure how far we want to get into a discussion of tax policy before someone chimes in with purple text, but I'm game.

In Kentucky, sales tax is charged on any mail-order or Internet purchases made from a retailer with a physical presence ("nexus") in the state. If you order from JC Penney, you pay Kentucky sales tax because there are  JCP stores in the state. Ditto for Amazon, because there are fulfillment centers within our borders.

If you order something from an out-of-state source and no sales tax is collected, you are required to remit "use tax" to the state. A line is available on the state income tax returns for this purpose. The requirement is widely ignored, although when I worked for the Kentucky Revenue Cabinet (now called the Kentucky Department of Revenue) I threw them a bone every year on my state tax forms.

The catch is that if you physically buy something in a state that charges a sales tax lower than Kentucky's 6 percent, you are supposed to remit the difference as use tax. I'm not sure what neighboring or nearby states charge in sales tax, but say you went to a state with a 4 percent sales tax and bought a camera, you are supposed to give Kentucky the 2 percent difference.

Not surprisingly, there's no mechanism for a refund or a tax credit if you buy something in a state with a higher sales tax than Kentucky, although I recently saw an ad on television for a furniture store somewhere in the KY-TN-VA tri-state area advertising tax-free shopping to residents of the other two states.

Seems like a whole bunch of states (including my state of CO) need to relearn the lesson of why the Personal Property Tax became so unenforceable, and why many a state decided to get rid of it.

As to this idea, maybe Gov. McDonnell should let the next governor (next year) take a whack at this.

[oscar]

Seems like a whole bunch of states (including my state of CO) need to relearn the lesson of why the Personal Property Tax became so unenforceable, and why many a state decided to get rid of it.

Personal property tax (similar to the real property tax on land and buildings, only for cars, boats, etc.) has nothing to do with the sales and use taxes on online and other retail sales under discussion here.

Virginia has personal property tax, on cars among other things.  Localities have had some issues with getting 100% compliance, but enforceability wasn't high among the tax's major problems that led to its partial (and failed attempt at full) elimination for cars.

[cpzilliacus]

Baltimore Sun: Virginia proposal complicates Maryland's gas tax debate - McDonnell seeks to scrap commonwealth's tax on gasoline

The governor of Virginia has thrown a new wrinkle into a Maryland debate by calling for abolition of the commonwealth's gas tax and increasing the sales tax to pay for roads and transit — a move that would alter the competitive balance between the two states.

This week's proposal by Gov. Bob McDonnell, a Republican, is part of a five-year $3.1 billion plan that seeks to address that state's lack of money for transportation projects — which parallels a similar shortfall in Maryland – by shifting from a dwindling revenue source to one with the potential to grow with inflation.

The plan, which would make Virginia the first state to scrap the gas tax entirely, would have significant implications if it were approved by the Republican-controlled legislature in Richmond. Among other things, it would create an incentive for Marylanders to gas up south of the Potomac rather than pay their home state's gas tax of 23.5 cents a gallon.

[Duke87]

In Kentucky, sales tax is charged on any mail-order or Internet purchases made from a retailer with a physical presence ("nexus") in the state. If you order from JC Penney, you pay Kentucky sales tax because there are  JCP stores in the state. Ditto for Amazon, because there are fulfillment centers within our borders.

New York collects sales tax on things you buy online. Connecticut, interestingly, does not. Go figure.

[MASTERNC]

But paying tax to Virginia because you bought an item tax-free in another state has always struck me as wrong (and unenforceable anyway unless they spy on stores in other states.....which, FWIW, our ABC used to do!).

Pennsylvania liquor agents have been known to spy on customers of liquor stores in Maryland just south of the border.  There was an incident some years ago where deputies from the Cecil County Sheriff's Office ended up placing one or more Pennsylvania State Police Liquor Enforcement Officers (or maybe PSP troopers) under arrest for violation of Maryland law while they were watching for Pennsylvania residents making alcohol purchases in that county.  I am not sure how the matter was resolved (I suspect that the Cecil County State's Attorney might not have been very enthusiastic about prosecuting law enforcement officers from a neighboring state).

I heard they made them post a notice on the door of the store saying that PA police were watching.

http://articles.baltimoresun.com/2000-11-19/news/0011200300_1_liquor-store-cecil-county-maryland-stores

[cpzilliacus]

But paying tax to Virginia because you bought an item tax-free in another state has always struck me as wrong (and unenforceable anyway unless they spy on stores in other states.....which, FWIW, our ABC used to do!).

Pennsylvania liquor agents have been known to spy on customers of liquor stores in Maryland just south of the border.  There was an incident some years ago where deputies from the Cecil County Sheriff's Office ended up placing one or more Pennsylvania State Police Liquor Enforcement Officers (or maybe PSP troopers) under arrest for violation of Maryland law while they were watching for Pennsylvania residents making alcohol purchases in that county.  I am not sure how the matter was resolved (I suspect that the Cecil County State's Attorney might not have been very enthusiastic about prosecuting law enforcement officers from a neighboring state).

I heard they made them post a notice on the door of the store saying that PA police were watching.

http://articles.baltimoresun.com/2000-11-19/news/0011200300_1_liquor-store-cecil-county-maryland-stores

I remember reading that article (does not seem it was that long ago), but I have read at least one other article where Pennsylvania law enforcement officers were actually placed under arrest by Cecil County deputies.

This may not be as much of an issue any longer, as Maryland has raised its alcohol taxes since 2000 (though I don't know what the difference in price is, since I don't buy enough of the stuff to bother with comparison shopping, and besides, I don't think I have ever purchased retail alcohol in Pennsylvania, though I have had a few drinks with friends at bars in Philadelphia).

[NJRoadfan]

This may not be as much of an issue any longer, as Maryland has raised its alcohol taxes since 2000 (though I don't know what the difference in price is, since I don't buy enough of the stuff to bother with comparison shopping, and besides, I don't think I have ever purchased retail alcohol in Pennsylvania, though I have had a few drinks with friends at bars in Philadelphia).

A lot of the reason PA people buy booze in NJ is selection and better hours. A state run store simply can't compete with multi-story wine and spirits dealers commonly found in NJ that tend to be open later and 7 days a week. Looking at prices, PA's aren't really that much higher then NJ's (some liquors are even a bit cheaper). I did have to bring some alcohol to relatives in NC however, as their ABC store prices are high and selection is very limited.

[SP Cook]

Gas Tax:  Grab a map and you see what Virginia is up to.  Well positioned to grab lots of out of state customers.  Wytheville, just for one example, already does land office type crowds every day.

Trust Funds and all of that:  Every state does that.  In my state, they raid the gas tax fund all the time.  The legislature just declares something to be "transportation" and spend money on it.  The state supreme court has ruled that whatever the legislature calls transportation is transportation.

Use tax:  The use tax was supposed to be enforced only against "big people", to keep companies from buying heavy equipment and such out of state.  About 25 years ago we had a governor who, after being finally rebuffed on his 5th attempt to raise taxes decided that the "average person" bought X amount of stuff out of state and changed the tax form so you could either add the use tax on that "average amount" or itemize what you had actually spent (think of it as a standard deduction in reverse).  Vast majority of people just put down zero and he gave up.

[bsmart]

But paying tax to Virginia because you bought an item tax-free in another state has always struck me as wrong (and unenforceable anyway unless they spy on stores in other states.....which, FWIW, our ABC used to do!).

Pennsylvania liquor agents have been known to spy on customers of liquor stores in Maryland just south of the border.  There was an incident some years ago where deputies from the Cecil County Sheriff's Office ended up placing one or more Pennsylvania State Police Liquor Enforcement Officers (or maybe PSP troopers) under arrest for violation of Maryland law while they were watching for Pennsylvania residents making alcohol purchases in that county.  I am not sure how the matter was resolved (I suspect that the Cecil County State's Attorney might not have been very enthusiastic about prosecuting law enforcement officers from a neighboring state).

I heard they made them post a notice on the door of the store saying that PA police were watching.

http://articles.baltimoresun.com/2000-11-19/news/0011200300_1_liquor-store-cecil-county-maryland-stores

I remember reading that article (does not seem it was that long ago), but I have read at least one other article where Pennsylvania law enforcement officers were actually placed under arrest by Cecil County deputies.

This may not be as much of an issue any longer, as Maryland has raised its alcohol taxes since 2000 (though I don't know what the difference in price is, since I don't buy enough of the stuff to bother with comparison shopping, and besides, I don't think I have ever purchased retail alcohol in Pennsylvania, though I have had a few drinks with friends at bars in Philadelphia).

If I remember correctly they were arrested for concealed carry and other firearms violations

[jeffandnicole]

But paying tax to Virginia because you bought an item tax-free in another state has always struck me as wrong (and unenforceable anyway unless they spy on stores in other states.....which, FWIW, our ABC used to do!).

Pennsylvania liquor agents have been known to spy on customers of liquor stores in Maryland just south of the border.  There was an incident some years ago where deputies from the Cecil County Sheriff's Office ended up placing one or more Pennsylvania State Police Liquor Enforcement Officers (or maybe PSP troopers) under arrest for violation of Maryland law while they were watching for Pennsylvania residents making alcohol purchases in that county.  I am not sure how the matter was resolved (I suspect that the Cecil County State's Attorney might not have been very enthusiastic about prosecuting law enforcement officers from a neighboring state).

I heard they made them post a notice on the door of the store saying that PA police were watching.

http://articles.baltimoresun.com/2000-11-19/news/0011200300_1_liquor-store-cecil-county-maryland-stores

I remember reading that article (does not seem it was that long ago), but I have read at least one other article where Pennsylvania law enforcement officers were actually placed under arrest by Cecil County deputies.

This may not be as much of an issue any longer, as Maryland has raised its alcohol taxes since 2000 (though I don't know what the difference in price is, since I don't buy enough of the stuff to bother with comparison shopping, and besides, I don't think I have ever purchased retail alcohol in Pennsylvania, though I have had a few drinks with friends at bars in Philadelphia).

Pennsylvania is quite unusual with its alcohol laws.  Wine, spirits, hard liquor, etc can only be purchased in state stores.  Beer can be purchased in many places for takeout, but only in small quantities...40 oz bottles, 6 packs & 12 packs for example.  There's a limit of 192 oz of beer one can purchase at any one time.  I commonly buy 18 packs here in NJ, which would be a prohibited purchase in PA.  Surprisingly, those small purchases can be made in a number of places...even Pizza Hut can sell takeout beer...but not supermarkets and gas stations for example, unless there's a separate area just for selling beer.

If you want larger quantities, such as a case, you have to go to a distribution center. 

Any border state tends to get customers from PA.  One can find plenty of PA tagged cars at liquor stores in NY, OH, MD, NJ & DE.  PA can also be fairly restrictive when liquor is available for sale, while those same border states are much less restrictive.