In a search for departmental funding, Mobile County District Attorney Ashley Rich recently asked lawmakers to increase the county liquor tax. While line item taxes like this are almost always poor public policy, the deal for taxpayers becomes even more suspect when you examine the details.
On a typical bottle of spirits purchased in Alabama, over 60 percent of the purchase price is made up of a tax or fee of some kind. The proposal to add a 5 percent county tax would only exacerbate this problem.
In addition, because the state government operates the wholesaling and much of the retailing of spirits sales in Alabama, cities and counties already share in taxes and profits generated by the sale of distilled spirits.
Currently, Alabama has the fourth highest excise tax rate in the U.S. and almost triple the rate of Florida. It is common for Alabamians to shop in nearby Florida to avoid high prices, and if Mobile County adds an additional tax this will significantly increase cross-border sales. And because these are locally applied taxes, it is the local Mobile County businesses that are at a competitive disadvantage vis-à-vis neighboring jurisdictions.
Further, if other Alabama counties decided to impose a similar tax, the higher tax rates would cause a projected decline in retail sales of $21 million. As sales fall, so does economic activity, resulting in the loss of an estimated 205 jobs in the hospitality industry.
Perhaps the most troubling issue with this proposal is the discriminatory treatment of distilled spirits. Science clearly shows that a standard drink of beer, wine and distilled spirits each contain the same amount of absolute alcohol — six-tenths of one ounce — so it follows that each product should be treated fairly and equitably. It is unfair to the hospitality workers that could lose their jobs — and the consumers who are unfairly targeted — to arbitrarily single out spirits for a significant tax hike.
It is easy to bill others when faced with tough budget decisions. However, this plan would ultimately hurt consumers, target local businesses and cost jobs. Lawmakers should reject it.
Vice President, Distilled Spirits Council,